FX.co ★ Bund Yields Steady as ECB Decision Looms and EU-US Trade Deal Nears

Germany’s 10-year Bund yield remained steady at 2.66% amid increasing optimism over trade developments, as investors focus on the upcoming European Central Bank (ECB) policy decision. Reports indicate that the European Union and the United States are nearing an agreement that would apply 15% tariffs on certain European imports while removing tariffs on others. Concurrently, the ECB is anticipated to maintain interest rates after a series of eight consecutive cuts, as policymakers assess ongoing trade uncertainties, the strength of the euro, and low inflation levels. Money markets have fully factored in a 25-basis-point rate cut by December, with about a 50% likelihood of this adjustment occurring as early as September. In terms of economic data, German consumer sentiment unexpectedly declined as August approached, while preliminary PMI figures revealed only slight growth in business activity in July, with a deceleration from June that did not meet expectations.