LONDON-European bonds plummeted on Tuesday on expectations that US President Donald Trump will yet again hold his decision on whether to implement tariffs on European autos. This dampened investors’ appetite regarding government debt.

Trump is expected to give key note discussion regarding US trade policy at the Economic Club of New York on Tuesday. In line, investors are expecting him to delay the decision for another six months as a follow-up for the 180-day delay of the Section 232 auto investigation results.

Investors are also keeping an eye on recent updates and development of the months-long Sino-US trade truce as hopes emerge that the United States are willing to cancel tariff implementation on Chinese goods.

German Bund yields were 1.1 higher at -0.237% as it closed session to five-month high of -0.218% last week. Bonds’ yields across European zone inched higher with the same percentage. However, Italian 10-year paper ended negatively with 3.5 bps at 1.378% record.

Italy and some parts of Spain and Portugal have suffered inactivity in previous sessions.

Spanish 10-year bond yields soared at 1.7% bps at 0.422% after its selloff last Monday.

Expectations that auto tariffs might get postponed again impacts the euro zone government bonds already, according to Peter Chatwell, Mizuho head of rates strategy.

“But when the news is confirmed, there is room for a little bit more weakness,” he added.

The German Zew economic records will be disclosed at 1000 GMT, which according to economic analysts will bear improvement this month.

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