Bund Yields Hit 4-Month High as ECB Pauses, EU–US Trade Deal Nears

Germany’s 10-year Bund yield climbed above 2.7%, touching its highest level since March 28, as investors dialed back expectations for further ECB rate cuts and rotated out of safe-haven assets amid progress in EU–US trade talks.

The ECB held interest rates steady during its July meeting after eight cuts over the past year amid ongoing trade negotiations with the Trump administration, with a key deadline approaching on August 1.

Also, President Christine Lagarde said the eurozone was now “in a good place” as inflation returned to target.

Reports suggest the EU and US are nearing a deal that would impose 15% tariffs on select European imports while removing duties on others.

In money markets, investors have reduced their expectations for further ECB rate cuts, now giving about a one-in-four chance of easing in September.

The likelihood of a rate cut by December has also dropped to roughly 70%, compared to more than 90% before the ECB decision.