Eurozone bond yields experienced a notable uptick on Thursday, following the U.S. Federal Reserve’s decision to cut interest rates while signaling a more cautious approach to easing in 2025.
This decision widened the gap between U.S. and European yields, highlighting contrasting monetary policy directions.
Germany’s 10-year bond yield, the eurozone benchmark, rose 5 basis points to 2.286%, reaching its highest level since late November. Meanwhile, U.S. 10-year Treasury yields climbed to 4.531%, their peak since May, reflecting the Fed’s measured stance.
The yield spread between U.S. Treasuries and German bunds remains at its widest since 2019, driven by the Federal Reserve’s hesitancy to cut rates further, contrasting with the European Central Bank’s pressure to ease rates amid a sluggish regional economy.
Italy’s 10-year bond yield also surged, climbing 8 basis points to 3.479%, while the yield spread between Italian and German bonds widened to 118 bps. Additionally, Germany’s two-year bond yield rose 2 basis points to 2.06%. The day’s developments underscore the growing divergence in global monetary policies, as central banks like the Bank of Japan and the Bank of England opted to hold rates steady.
