Weekly Report CW 10

US trade policy continues to create uncertainty in the markets. At the beginning of the week, stock markets fell sharply, and the S&P 500 gave up all the gains made since the US election. Especially the large tech companies were among the losers. However, on Wednesday, the markets experienced a technical rebound.

The European Central Bank (ECB) cut its key interest rate by 0.25% points to 2.5% this week. This decision was made against the backdrop of falling inflation and represents the third interest rate cut since the summer. The benchmark deposit rate now stands at 3.25%. The markets reacted cautiously, as many investors had already expected such a measure.

The biggest headline of the week, however, was the sell-off in the bond markets. The trigger for this was the plans of the newly elected German government to massively increase state spending – following the motto „Whatever it takes.“ As a result, yields on German government bonds rose sharply over the course of the week, from below 2.4% to more than 2.8%. This weakness also affected other markets: the yield on the 10-year Japanese government bond reached 1.5% for the first time since June 2009, and US Treasuries fell for three consecutive days, now standing at 4.3%. The euro benefited from the higher yields in the EU and recorded the strongest weekly increase against the dollar since March 2009.

Bitcoin also showed significant volatility. After sharp losses at the end of February, the price rose sharply again after President Trump unexpectedly announced that a basket of digital currencies would be included in the US strategic reserves. Bitcoin is now trading above the $90,000 mark again. Gold benefited as a safe haven, rising back above $2,900. The oil price declined, as OPEC+ intends to go ahead with the planned production increase in April.