Investors Seek Safety as Trump's Tariff Policy Shakes Markets

European government bond yields experienced a significant drop on Thursday, as investors rushed towards safe-haven assets in response to the new tariff policy announced by US President Donald Trump. The policy includes a minimum 10% levy on all imports, with even higher rates for certain trading partners, sparking widespread concern over potential global stagflation.

Market Reactions Across Europe

The immediate effects were stark: Germany's 10-year Bund yield fell by 8.4 basis points to 2.641%, with even sharper declines observed in shorter maturities. Similarly, France's 10-year OAT yield decreased by 6.8 basis points to 3.367%, and the UK's 10-year Gilt yield saw a drop of 10.3 basis points to 4.541%. Italy wasn't spared, with its 10-year yield falling by 5.8 basis points to 3.765%.

This flight to safety underscores the market's nervousness about the potential for escalating trade tensions and their impact on global economic growth.