Rates Spark: Volatile Equities Make Bonds Look Better

2026-02-24 04:30:00 ET

By Michiel Tukker , Senior European Rates Strategist

European government bonds turning more attractive on a risk-adjusted basis

Risk sentiment is set to be the key driver of rates this week, and, indeed, the revival of tariff tensions and AI jitters dragged the curve lower on Monday. Although tariff turmoil creates plenty of uncertainty that weighs on sentiment, the potential impact on the broader macro-outlook is more nuanced. So far, US tariffs on the eurozone from ‘Liberation Day’ last year have not thwarted the gradual but persistent growth recovery. A slightly lower rate would benefit the EU but is also unlikely to be a game-changer. The impact on the US economy is possibly larger, as a new round of tariff uncertainty does not bode well for investor confidence. And indeed, the bullish move in UST yields was more pronounced....

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