ECB Holds Rates Steady, Europe Bond Yields Rise Amid Trade Talks

The European Central Bank (ECB) held its benchmark interest rate steady at 2%, signaling a pause after a year of cuts amid ongoing uncertainty about the trade outlook between the EU and the United States. ECB President Christine Lagarde described the euro zone economy as being in a "good place," with growth meeting or exceeding forecasts, which led markets to reduce expectations for a rate cut in September. Following the ECB's decision, European government bond yields rose sharply, with the two-year German bond yield reaching a two-month high and the 10-year yield also climbing. Trade negotiations between Washington and Brussels appear close to finalizing a deal involving 15% tariffs on certain European imports alongside the removal of other duties, contributing to market caution. German economic data showed modest growth with consumer sentiment unexpectedly declining and flash PMI figures slowing down from June, adding to the cautious stance. Corporate news included Deutsche Bank's strong Q2 profit, which helped lift the Frankfurt DAX 40 slightly despite the mixed economic signals.