German government bonds saw gains, with long-term bonds leading the way, while US Treasuries fell due to ongoing concerns over tariffs. The yield on Germany's 10-year bonds decreased by 4 basis points to 2.54%, down about 4 basis points from last week's closing level. In contrast, US 10-year Treasury yields have risen over 50 basis points this week.
In the UK, government bonds experienced a decline, with short-term bonds falling the most. The yield on 2-year UK bonds rose by 14 basis points to 4.04%, and the 10-year yield increased by 10 basis points to 4.74%. The money market has significantly reduced its bets on the Bank of England cutting rates this year, now expecting a 77 basis point cut, which is 13 basis points lower than the previous estimate.
Recent data showed the UK economy experienced its strongest growth in nearly a year. Meanwhile, the money market is also reducing bets on Federal Reserve rate cuts, as tariff concerns have pushed US short- and long-term inflation expectations to multi-decade highs.
