The yield on Germany’s 10-year Bund tumbled to 2.63%, its lowest level since August 7, as escalating tensions between the US and China stoked fears of a global trade war.
US President Trump said on Friday there was no reason to meet with China’s Xi Jinping in two weeks in South Korea as planned, while preparing to raise tariffs on Chinese imports.
Investors also monitored political developments in France and the US, alongside disappointing German economic data.
President Emmanuel Macron is expected to appoint a new prime minister following Sébastien Lecornu’s resignation, with signs that snap elections are likely to be avoided.
The US government shutdown is expected to continue, threatening the release of key economic indicators and potentially affecting the Federal Reserve’s policy guidance.
In Germany, exports unexpectedly declined, while imports fell more sharply than anticipated, following earlier steep drops in industrial output and factory orders.