FX.co ★ German Bund Yield Drops from Multi-Year Highs

Germany’s 10-year Bund yield has fallen below 2.8%, moving further away from the 13-year peak of 2.94% reached on March 12. This shift comes as investors consider statements from European Central Bank (ECB) President Christine Lagarde alongside the latest policy declaration from the US Federal Reserve. On Thursday, in a discussion with European lawmakers, Lagarde cautioned that a proposed 25% tariff by the US on European imports might reduce the eurozone's growth by 0.3 percentage points in the first year. Should Europe retaliate, the impact could deepen to a 0.5-point reduction. However, she minimized concerns over inflationary risks, implying that the ECB is unlikely to respond with interest rate hikes. Recently, traders have adjusted their expectations for ECB rate cuts, now anticipating two reductions, probably in April and June. In the US, the Federal Reserve has kept its interest rates unchanged while maintaining plans for two cuts this year, despite lowering its growth forecast and raising its inflation projections.