Investors Seek Safety as Tariff Fears Grip Markets

European government bond yields experienced a significant drop on Thursday, as the financial markets reacted to US President Donald Trump's aggressive new tariff policies. This move has prompted a swift flight to safety among investors, wary of the potential global economic repercussions.

The Impact of Trump's Tariff Policy

The newly announced tariffs, imposing a minimum 10% levy on all imports with even higher rates for certain trading partners, have not only sent equity futures into a tailspin but also stoked fears of stagflation across global markets. The policy's announcement has led to a sharp decline in European bond yields, reflecting the market's nervousness.

European Bond Yields in Detail

By 9:20 am CET, the financial landscape showed clear signs of stress: Germany's 10-year Bund yield decreased by 8.4 basis points to 2.641%, with shorter maturities witnessing even more pronounced drops. Similarly, France's 10-year OAT yield fell by 6.8 basis points to 3.367%, and the UK's 10-year Gilt yield saw a reduction of 10.3 basis points to 4.541%. Italy was not spared, with its 10-year yield dropping by 5.8 basis points to 3.765%.