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

Germany's 10-year Bund yield has risen above 2.75%, marking its highest point since late March. This increase comes as investors temper their expectations for additional rate cuts from the European Central Bank (ECB) and shift away from safe-haven assets amid promising progress in trade discussions between the European Union and the United States. During its July meeting, the ECB decided to maintain interest rates steady after implementing eight cuts over the previous year, as trade talks with the Trump administration continue with a crucial deadline approaching on August 1. ECB President Christine Lagarde noted that the eurozone's inflation has returned to target levels, declaring the region to be "in a good place" economically. Reports indicate that the EU and US are close to finalizing a deal that will enforce a 15% tariff on certain European imports while removing duties on others. In the money markets, there has been a noticeable reduction in the anticipation of more ECB rate cuts, with the probability of easing in September now estimated at around 25%. Additionally, the likelihood of a rate cut by December has diminished to approximately 70%, down from over 90% before the ECB's announcement.