Eurozone Bond Yields Steady as ECB Speeches Awaited Amid Global Tension Easing

Euro zone government bond yields have generally stabilized or slightly declined as concerns over U.S. regional banks and U.S.-China trade tensions eased, with investors awaiting key speeches from European Central Bank President Christine Lagarde ahead of a blackout period before next week's rate-setting meeting. Germany's 10-year Bund yield hovered near recent four-month lows, reflecting ongoing demand for safe-haven assets amid uncertainties including the U.S. government shutdown, which is expected to end soon. Meanwhile, U.S. Treasury yields edged lower amid improving risk sentiment, supported by optimism over U.S.-China trade negotiations, including an upcoming meeting between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng to avoid tariff escalations. Despite the easing of global tensions, cautious sentiment persists due to the prolonged U.S. government shutdown and potential for harsher measures if it continues. In Europe, bond yields have seen a modest uptick as safe-haven demand lessened, partly influenced by a recent credit rating downgrade of France, although this had minimal immediate market impact. Overall, markets are pricing in a potential ECB rate cut by mid-2026 and at least two Federal Reserve rate cuts by the end of the year, reflecting a cautiously optimistic investor outlook amid ongoing geopolitical and economic developments.