Tradeweb Government Bond Update – June 2025

As central banks held their monetary policy meetings across the globe, the evolution of government debt market yields was varied across jurisdictions in June. The European Central Bank kicked things off on June 11 with its fourth rate cut this year, citing easing inflation, In contrast, the U.S. Federal Reserve held rates steady on June 18 for the fourth consecutive meeting. Similarly, the Bank of Japan and Bank of England kept rates unchanged on June 17 and June 19, respectively.

Beginning in the U.S., the yield on the 10-year Treasury benchmark note ended the month at 4.23%, down more than 19 basis points from May 30.

Bhas Nalabothula, Head of U.S. Institutional Rates at Tradeweb, said: “June saw the continuation of geopolitical unrest in the Middle East, heightened by the Iran/Israel conflict. On June 24, the Federal Reserve Chair Jerome Powell confirmed at its Congressional testimony that a higher outlook for inflation was causing the central bank to keep rates unchanged for the foreseeable. At the same time, the U.S. 10-year Treasury reached a month-high of 4.51% on June 6, while the 10-year and 30-year yield spread was at its steepest level in June since early October 2021, registering at 56 basis points at month-end.”

Yields in the Eurozone reflected a mix of upward and downward shifts. Belgium’s 10-year government bond yield rose 12 basis points to 3.15%, and its Austrian equivalent followed with an eight-basis point rise to 2.97%. Germany saw a more modest increase of under two basis points, bringing its 10-year Bund yield to 2.53% at month-end. The country’s inflation rate eased to 2% in June, according to preliminary data. In the same month, the HCOB Germany Manufacturing PMI reached a 39-month high of 49.

Over in the UK, the 10-year Gilt yield increased by 17 basis points to 4.49%. Household disposable income in the country fell at its fastest rate of 1% in two years in the first quarter of 2025, while in May, the inflation rate edged down to 3.4% from 3.5% the month prior. The S&P Global UK Manufacturing PMI rose to 47.7 in June from 46.4 in May, and the GfK Consumer Confidence Index increased by two points to -18 in the same month.

The French 10-year government bond yield climbed 10 basis points to 3.27% at the end of June. The annual inflation rate in France rose to 0.9% in the same month, ending the over four-year low of 0.7% seen in May. In contrast to its French counterpart, the Italian 10-year benchmark bond yield dropped by nearly three basis points to 3.46%. Italy’s inflation rate inched higher to 1.7% in June from 1.6% in the previous month.

Moving to Asia Pacific, Japan's 10-year government bond yield finished June eight basis points lower at 1.43%, easing after May’s nearly 20-basis point surge. While long-end yields had previously reached record highs in May, June saw more subdued movement as the Bank of Japan maintained interest rates and the country’s inflation rate eased to 3.1% year-over-year during the month.

In Australia, the 10-year benchmark bond yield dropped by almost nine basis points to 4.25% at month-end, marking a reversal from the 19-basis point rise seen in May. The inflation rate in Q1 this year registered at 2.4%, which is unchanged from the previous quarter.  

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