Tradeweb Government Bond Update – March 2025

Global government debt markets experienced a sell-off in March, with yields increasing across the board. Those for Germany’s 10-year Bund saw the biggest move, rising by 34 basis points over the month to finish at 2.73%. On March 4, the leader of the CDU/CSU Conservatives, Friedrich Merz, announced plans to loosen the country’s ‘debt brake’ to allow for higher defence spending. According to preliminary data from the Federal Statistical Office, the German inflation rate slowed to 2.2% in March, marking the lowest reading since November 2024.

On March 6, the European Central Bank cut its key rate by 25 basis points to 2.5%. Italy’s 10-year benchmark note yield increased by 33 basis points to 3.86% at month-end. The country’s inflation rate accelerated to 2% year-over-year in March, up from 1.6% the month prior. Meanwhile, the HCOB Italy Manufacturing PMI fell to 46.6 from 47.4 in February.

In neighbouring France, the yield on the 10-year government bond rose by 22 basis points to 3.45%, after reaching a three-year high of 3.6% on March 6. The annual inflation rate in the country remained unchanged at 0.8% in March, holding at its lowest level since February 2021.

Elsewhere in Europe, the UK 10-year Gilt yield climbed 22 basis points to close at 4.68%. The GfK Consumer Confidence rose slightly by one point to -19 in March, while the S&P Global UK Manufacturing PMI registered at 44.9, the lowest reading in 17 months.

“It was a busy month in the UK for fiscal policy and the publication of economic data. On March 26, Chancellor Rachel Reeves delivered the country’s Spring Statement, and the UK 10-year Gilt yield jumped by six basis points from 4.72% at 12:44pm to 4.78% at 12:54pm. On the same day, it was announced that the UK inflation rate fell more than expected to 2.8% in February, down from 3% the month prior. At the moment, 45 basis points worth of cuts by the Bank of England are being priced in over the next five meetings as implied by pricing on Tradeweb,” said Roderick Joniaux, Head of European Government & Supranational Products at Tradeweb.

Similar to its French equivalent, the Japanese 10-year government bond yield reached a three-year high of 1.59% on March 27, but ended the month at 1.49%, 12 basis points higher than February. On March 18, the Bank of Japan announced it would be holding its key interest rate at 0.5%. The annual inflation rate fell to 3.7% in February from a two-year high of 4% the month prior.

In Australia, the Westpac–Melbourne Institute Consumer Sentiment Index posted a 4% increase in March to 95.9 from 92.2 in February. The yield on the country’s 10-year benchmark note rose nine basis points to 4.36% at the end of March.

Its Canadian equivalent climbed seven basis points over the month to finish at 2.97%. The annual inflation rate in Canada jumped to 2.6% in February from 1.9% in January, which is the highest reading in eight months.

Finally, the U.S. 10-year Treasury yield increased by just one basis point in March to 4.24%. On March 19, the Federal Open Market Committee voted to hold its interest rate in a range between 4.25%-4.5%, where it has been since December 2024. The annual inflation rate in the U.S. eased to 2.8% in February from 3% in January, while the country added 151,000 jobs in February, up from a downwardly revised 125,000 in the prior month.

Related Content 

Tradeweb Government Bond Update – February 2025