Rates Spark: A U.S. 3yr Hiccup, While European Spreads Do Their Own Thing

2025-08-06 01:50:00 ET

By Benjamin Schroeder and Padhraic Garvey, CFA

Supportive backdrop for EGB may start fading

Generally more benign macro data and now at least some "certainty" around US-EU trade relations have provided the backdrop for 10y Bund yields to remain within an upwards trend that has been in place since mid-April. This backdrop also helped to now firm up views around the European Central Bank policy outlook. Markets are looking for only one more cut to be delivered within the next 12 months, and along with improving sentiment rates, volatility measures are sitting on cycle lows....

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