Euro area government bond yields rose on Monday, after falling on Friday, as possible exclusion for Chinese electronics from steep US import tariffs eased fear about the adverse impact of US trade action on the global economy.
The US exempted smartphones and computers from what it called “reciprocal” tariffs, providing a potential reprieve for major technology firms.
However, President Donald Trump said levies would be likely at some point.
Germany’s 10-year yield - the euro area’s benchmark - rose 4.5 basis points to 2.57% after dropping 5.5 bps on Friday.
US 10-year Treasury yields were down 3 bps at 4.46% after posting their biggest weekly increase in more than two decades as Trump’s unpredictable trade policies prompted global market dislocation and forced selling.
Italian bonds outperformed German peers, with the 10-year yield flat at 3.81% after S&P upgraded its rating of Italy’s long-term credit to “BBB+” from “BBB”.
The yield spread between Italian and German 10-year bond yields fell to 120 bps.
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Money markets priced in the European Central Bank deposit facility rate as being 1.73% in December, versus 1.68% late on Friday and 1.9% the day before Trump announced sweeping tariffs on April 2.
Germany’s two-year yield, which is more sensitive to market expectations for ECB policy rates, rose 4.5 bps to 1.80%.
It hit 1.623% last week, its lowest since October 2023.
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