The yield on the German 10-year Bund edged down toward 2.5%, approaching its lowest level since May 7, as investors sought safe-haven assets amid escalating tensions in the Middle East and renewed trade war concerns.
US President Donald Trump said American personnel were being relocated from the region, warning it “could be a dangerous place.” At the same time, he announced plans to send letters to key trading partners in the coming weeks outlining new unilateral tariff rates.
Meanwhile, in the US, softer-than-expected inflation data and signs of a gradually cooling labor market bolstered expectations that the Federal Reserve could begin cutting interest rates as early as September.
In Europe, remarks from ECB officials have strengthened speculation that the central bank may soon pause its easing cycle, adopting a wait-and-see stance to assess the economic impact of potential US tariffs.