What’s going on here?
Eurozone bond yields held steady, but US Treasury yields rose after Fed Chair Jerome Powell signaled that high interest rates are here to stay.
What does this mean?
The stable borrowing costs in the eurozone contrast with rising US Treasury yields, a result of Powell’s hawkish comments suggesting lasting high rates in the US. Eurozone bonds are recovering from uncertainties that began with worries about US trade tariffs post-Trump’s election, which led to calls for more ECB rate cuts. German 10-year bond yields, the eurozone benchmark, ticked up slightly to 2.35%. After a recent 25 basis point rate cut to combat low inflation, the ECB faces internal debates over the risks of persistent low inflation, showing divisions among policymakers. Market predictions now place the likelihood of a significant rate cut next month at just 25%, down from 42%.
Why should I care?
For markets: Interest rate tug-of-war.
The split…
