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European bond markets face renewed pressure amid China trade tensions

Rabobank said sharp moves in French, Italian and Greek bonds and an unresolved dispute over Chinese hybrid vehicle imports are adding to the pressure.

Reported · Written up by our desk · Central Banks

FXStreet highlights a Rabobank RaboResearch Global Economics & Markets note pointing to renewed pressure in European sovereign yields alongside rising political and economic tensions with China.

The report described sharp moves in French, Italian and Greek bond markets, and it tied the wider stress to Europe’s struggle with Chinese hybrid vehicle imports.

Rabobank said China rejected European calls for a voluntary limit on hybrid electric vehicle exports, where negotiators had hoped for a soft quota to cut China’s share of the European market from 30% to 15%.

The note also said that, as a result, a move toward more overt trade restrictions now looks unlikely to be avoided, with the potential for retaliation from China.

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