Euro zone yields on track for a weekly drop, Middle East in focus

Euro zone government bond yields were on track for a weekly decline as the Israel-Iran air war entered its eighth day, with investors downplaying inflation concerns while awaiting clarity on a potential US involvement in the conflict.
President Donald Trump will make a decision in the next two weeks, the White House said on Thursday, raising pressure on Tehran to come to the negotiating table.
German 10-year yields, which serve as the benchmark for the wider euro zone, fell 2.5 basis points (bps) to 2.49%, and were set to end the week 4.5 bps lower. Money markets priced in a European Central Bank deposit facility rate at 1.77% in December, compared with 1.75% last week.
The yield on the German two-year bonds, which are more sensitive to expectations for ECB policy rates, was down 1.5 bps at 1.83%.
Euro zone bond yields steady before Fed, traders await new catalysts
A drop in appetite for risk assets widened yield spreads for government bonds of highly indebted countries, such as Italy and France, against safe-haven German Bunds.
Italy's 10-year yields dropped 4.5 bps to 3.50%. Italian yield gap against Bunds - a market gauge of the risk premium investors demand to hold Italian debt – tightened to 100 bps on Friday, but was set for its biggest weekly rise in a year.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Recorder

30 minutes ago

• Business Recorder

Audi could build plant in US to placate Trump, Spiegel reports

BERLIN: Volkswagen's premium brand Audi could build a plant at a new location in the United States under scenarios being considered to placate President Donald Trump in the tariff conflict, the Spiegel news magazine reported on Friday. Audi is considering building a plant in the southern U.S., which would be the more expensive option out of a number of scenarios being considered, with company sources estimating costs of up to 4 billion euros ($4.6 billion), the report said. An Audi spokesperson said that the company aims to build up more of a presence in the United States. 'We are currently examining various scenarios for this. We are confident that we will make a decision this year in consultation with the (Volkswagen) group on how this will look in concrete terms,' she said in an emailed statement, reaffirming earlier comments made by the company. Audi has no production of its own in the U.S., but Volkswagen has a plant in Chattanooga, Tennessee and one under construction near Columbia, South Carolina. Trump's announcement of sweeping tariffs has already racked up hundreds of millions of euros in costs for German carmakers heavily reliant on their export business, according to an industry representative. BMW, Mercedes-Benz and Volkswagen are in talks with Washington over a possible import tariff deal, seeking to use their U.S. investments and exports as leverage to soften any blow, sources have told Reuters.

Business Recorder

an hour ago

• Business Recorder

Palm oil logs sixth weekly gain, highest in two months

KUALA LUMPUR: Malaysian palm oil futures ended higher on Friday, logging a sixth consecutive weekly gain, despite weak demand in key markets. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 11 ringgit, or 0.27%, to 4,115 ringgit ($968.24) a metric ton, the highest closing price since April 15. The contract gained 4.79% this week. Trading volumes have been relatively thin and prices have largely factored in most internal and external variables, Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, said. 'Going forward, sustaining the current trend will require additional bullish news to emerge. The demand side will be particularly crucial in July as the current market rally has been premised solely on external factors and has not yet demonstrated a robust increase in demand.' Dalian's most-active soyoil contract rose 0.44%, while the palm oil contract gained 0.05%. Soyoil prices on the Chicago Board of Trade were up 1.5%. Palm flat as strong Dalian oils counter weak demand Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market. Cargo surveyors estimated that exports of Malaysian palm oil products during June 1-20 rose between 10.9% and 14.3%, compared with the same period a month ago. Oil prices fell, but remained on course for a third consecutive weekly rise, after the White House delayed a decision on U.S. involvement in the Israel-Iran conflict. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The ringgit, palm's currency of trade, strengthened 0.16% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Business Recorder

5 hours ago

• Business Recorder

Palm oil falls on weak demand; set for sixth weekly gain

KUALA LUMPUR: Malaysian palm oil futures fell on Friday due to weak demand in key markets, although the contract was set for a sixth consecutive weekly gain despite needing a catalyst to sustain momentum. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 10 ringgit, or 0.24%, to 4,094 ringgit ($962.61) a metric ton at the midday break. The contract has gained 5.5% so far this week. Trading volumes have been relatively thin and prices have largely factored in most internal and external variables, Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, said. 'Going forward, sustaining the current trend will require additional bullish news to emerge. The demand side will be particularly crucial in July as the current market rally has been premised solely on external factors and has not yet demonstrated a robust increase in demand.' Dalian's most-active soyoil contract rose 0.52%, while the palm oil contract shed 0.05%. Soyoil prices on the Chicago Board of Trade were up 0.38%. 'Palm oil remains cornerstone of Pakistan's edible oils and fats sector' Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market. Cargo surveyors are expected to release Malaysian palm oil export estimates for June 1-20 later in the day. Brent crude prices pared gains from the previous session, falling nearly $2 on Friday after the White House delayed a decision on US involvement in the Israel-Iran conflict, but they were still poised for a third straight week in the black. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The ringgit, palm's currency of trade, strengthened 0.09% against the dollar, making the commodity more expensive for buyers holding foreign currencies.