German Yields Steady as US Fiscal Woes Deepen
Germany's 10-year Bund yield remained stable at 2.65%, while the 30-year yield increased to a two-month peak of 3.18%. This rise coincided with growing investor apprehension regarding the deteriorating fiscal outlook in the United States, just as the House of Representatives prepared to vote on President Donald Trump's proposed tax-cut bill. Adding to the pressure on bond markets was the tepid demand observed at Wednesday's $16 billion auction of 20-year US Treasury bonds, following Moody's recent downgrade of the U.S. credit rating. Meanwhile, in Europe, markets were evaluating a series of economic reports. Notably, Germany's Ifo Business Climate Index increased to 87.5 in May, marking its highest point since June 2024 and slightly surpassing the expected 87.4, suggesting a slight alleviation in business uncertainty. However, PMI data indicated an unforeseen contraction in Germany's private sector, prompted by simultaneous declines in the manufacturing and services sectors.
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