The yield on the German 10-year Bund pared earlier losses to settle around 2.6%, as investors weighed a stronger-than-expected US jobs report, recent trade developments, concerns over UK public finances, and ECB signals supporting a continued accommodative policy stance.
The US economy added 147,000 jobs in June, well above forecasts of 110,000, while the unemployment rate unexpectedly fell to 4.1%, reinforcing expectations of upcoming Federal Reserve rate cuts.
Meanwhile, the EU indicated readiness for a trade deal with the US but acknowledged that leaders are also preparing for the possibility of no agreement ahead of President Trump’s July 9 deadline.
On the monetary policy front, markets are now pricing in just one more ECB rate cut before year-end, as officials adopt a cautious, wait-and-see stance amid persistent concerns over global trade uncertainty, Middle East instability, and the euro’s recent strength.