FX.co ★ Germany 10-Year Bund Yield Hovers at 2-Month High

Germany's 10-year Bund yield remained at 2.635%, close to its highest point in two months, as investors closely monitored the ongoing US-EU trade negotiations. On Wednesday, EU Trade Chief Maros Sefcovic announced that substantial advancements had been made towards establishing a framework agreement with the United States, indicating that a resolution could be reached within the upcoming days. The discussions primarily concentrate on safeguarding the EU's automotive industry, which remains a primary concern for European negotiators. Meanwhile, uncertainty persists following US President Donald Trump's declaration of significant new tariffs—imposing a 50% levy on both copper imports and Brazilian goods, effective from August 1. From an economic standpoint, Germany experienced greater-than-expected declines in both exports and imports in May, although industrial production exceeded forecasts. Bundesbank President Joachim Nagel cautioned that the US tariffs might most acutely impact Germany during 2025-2026; however, he anticipates a recovery commencing in 2026. This rebound is expected to be bolstered by increased government expenditure and reforms to Germany's debt brake, potentially enhancing growth by 0.75 percentage points by 2027.