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Investors pivot to Eurobonds as Trump tariffs and geopolitical volatility rattle US Treasury market

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Foreign investors are increasingly turning toward European Union debt as Donald Trump’s trade tariffs and a foreign policy punctuated by conflict drive nervous markets to seek stability in EU bonds.

According to a report by POLITICO, this shift represents welcome news for the European Commission, which has been scaling up bond issuances to fund new mandates, including increased defense spending and support for Ukraine’s war efforts.

Brussels is framing its “sales pitch” around a distinct narrative: the EU’s slow, consensus-driven decision-making process serves as a bastion of stability in a world upended by Trump. By investing in Eurobonds, the Commission argues, investors can secure a stake in that stability.

Data obtained by POLITICO reveals that fund managers from the United Kingdom, Asia, the Middle East, Africa, and Oceania have purchased 43% of the Eurobonds auctioned by the Commission since the start of 2026. This marks an 8% increase over the average of the last six years. The trend places EU Budget Commissioner Piotr Serafin in a strong position ahead of a scheduled promotional tour in mid-April, where he will pitch Eurobonds to investors in Hong Kong, Malaysia, and Singapore.

Since the beginning of 2026, the Commission has issued €52 billion in bonds, up from €44 billion during the same period in 2025.

“Demand for Europe is rising due to its alignment with the rules-based international order and values,” a senior EU official told POLITICO. “Consequently, demand for EU bonds is also on the rise.”

The eurozone’s rescue fund and its predecessors—the European Stability Mechanism (ESM) and the European Financial Stability Facility—have observed a similar trend. According to ESM data presented in January, these institutions have issued a total of €566 billion in bonds since 2010 and sold a record amount of debt to non-EU countries in 2025.

Since the US and Israel began bombing Iran in late February, central banks, governments, and international investors have sold a net total of more than $80 billion in US Treasuries. On this side of the Atlantic, the EU is leveraging these developments to solidify its reputation as a safe haven for anxious foreign investors.

“EU leaders are emphasizing that Europe is predictable in terms of policy, and in today’s global geopolitical environment, this will be noticed by many investors and market participants,” said Ken Egan of the KBRA credit rating agency.

The sell-off in the US does not yet constitute a mass exodus. While the US Treasury market stands at approximately $31 trillion, the market for bonds issued by the European Commission barely reaches €1 trillion. However, the rising demand for Eurobonds, coupled with a robust credit rating, allows the Commission to borrow at lower costs than many indebted EU governments.

In a sign of growing market confidence, the yield spread on Commission bonds over German government bonds—long considered the safest in the eurozone—has narrowed to approximately 40 basis points. This is down significantly from 70 basis points in 2022. One basis point is equal to one-hundredth of one percent. Meanwhile, US Treasuries offer investors a premium of over 130 basis points compared to German Bunds.

Factors beyond concerns over Trump’s policies are also at play. Some investors purchase EU bonds specifically for their very low risk profile, while increased issuance volumes have improved market liquidity, making it easier for investors to trade these securities.

Without common debt, governments would have struggled to manage consecutive crises independently. EU debt has funded a €650 billion post-pandemic recovery fund, €150 billion in low-cost loans to bolster military spending across the bloc, and a €90 billion package to assist Ukraine’s defense against Russia—the latter of which is currently blocked by Hungary.

The burgeoning interest in Eurobonds is also encouraging the EU’s ambition to challenge the dollar as the world’s primary reserve currency. The US has held this status for decades, formalized by the 1944 Bretton Woods agreement, which positioned the dollar as the anchor of the global financial system and facilitated cheap borrowing for Washington. The dollar accounts for approximately 56% of global reserves, while the euro remains steady in second place at around 20%.

However, the Commission is seizing this opportunity to attract foreign investors and expand its global influence.

“When investors seek to gradually decouple their economies from the dollar due to economic stability, they look to the euro,” the senior EU official noted.

The long-standing taboo surrounding the EU’s joint debt issuance was broken following the pandemic, ending years of resistance from Northern European governments during the euro crisis. As countries like France and Italy realized they were too indebted to manage recent crises alone, Eurobond issuances continued to grow in subsequent years.

For a bloc grappling with the economic fallout of the war in Iran and Trump’s repeated threats to withdraw the US security umbrella from Europe, these fiscal pressures are unlikely to ease. EU leaders are also determined to accelerate the economy to keep pace with the US and China. According to former European Central Bank President Mario Draghi, this is a costly undertaking requiring approximately €800 billion annually.

While investment on that scale remains distant, the Commission—which has become the world’s third-largest AAA-rated bond issuer after Canada and Germany, according to various rating agencies—has indicated it will continue to issue debt in the coming years. The rating for US Treasuries varies by agency between AAA and the slightly lower AA.

Brussels has stated that in its new seven-year budget proposal, effective from 2028, it will utilize Eurobonds to fund the reconstruction of Ukraine, respond to crises, and provide loans for member states to invest in EU priorities.

Nevertheless, frugal Northern nations such as Germany and the Netherlands, which pay lower interest rates by borrowing on their own behalf than through the Commission, oppose further EU common debt in ongoing negotiations. Until a new budget is agreed upon, investors expect the EU executive to maintain its current trajectory. The EU plans to sell €160 billion in Eurobonds this year, a €10 billion increase over 2025.

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Morawiecki launches Rozwój Plus movement following high-profile split from Poland’s PiS

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The first major event organized by the political circle of Mateusz Morawiecki, following his split from Law and Justice (PiS), is set to take place in Warsaw’s Praga district.

The gathering comes just days after the former prime minister and dozens of his allies severed ties with the national-conservative PiS.

The move also led to Morawiecki’s resignation from the presidency of the European Conservatives and Reformists (ECR) group in the European Parliament.

Organized by his Rozwój Plus (Development Plus) movement, the conference—dubbed “Morawiecki’s barbecue” due to the prominent inclusion of charcoal-grilled kiełbasa sausages—will mark a significant moment in Polish conservative politics.

The event will bring together key figures from the emerging movement alongside featured guests, including former world chess champion Garry Kasparov and General Rajmund Andrzejczak, the former chief of the General Staff of the Polish Armed Forces.

The gathering will offer Morawiecki’s camp an opportunity to present a political vision distinct from that of the current PiS leadership.

“Poles care about the fight for a strong Poland, their wallets, their jobs, housing, development, identity, culture, the Christian faith, and the defense of the cross hanging in the Sejm,” Morawiecki said this week. “These are our principles; this is our faith.”

Discussions will focus on demographics, security, and the politics of memory—topics that have grown increasingly sensitive amid recent tensions in Polish-Ukrainian relations.

While Morawiecki describes Rozwój Plus as an “expert group and think tank,” its political ambitions are becoming increasingly clear.

A new parliamentary group established on Wednesday brings together 40 deputies and one senator, providing his allies with an official platform in parliament and a base from which to challenge PiS.

“This is a threat to us,” Mateusz Kurzejewski, a PiS politician and spokesperson for Przemysław Czarnek’s prime ministerial campaign, told Euractiv. “After all, this is an initiative that reduces our chances of victory, though it does not eliminate them entirely. Therefore, we will continue to work hard.”

However, whether Morawiecki can successfully reshape the Polish right remains uncertain.

An SW Research poll commissioned by Onet revealed that 32.9% of respondents would consider voting for a party led by the former prime minister.

The strongest potential support comes from voters who already align with the right. Among respondents currently close to PiS, 14% said they would consider supporting Morawiecki, while 7.1% of those aligned with the further-right Confederation held the same view.

The initiative could also draw limited support from the ruling camp. Approximately 7.4% of voters currently supporting Prime Minister Donald Tusk’s pro-EU Civic Coalition, The Left, Poland 2050, or the Polish People’s Party indicated they would not rule out voting for a party led by Morawiecki.

Sources within Tusk’s government believe the split in PiS could benefit the ruling coalition in the short term.

“Particularly because this situation helps soften the impact of the hospital scandal,” one source told Euractiv. “Today, no one is talking about it anymore, and fortunately, no new statements have been made.”

The controversy revolves around allegations that a Warsaw hospital operated a preferential admission system for politicians belonging to the governing Civic Coalition, allowing them to enter a VIP lounge and receive medical treatment ahead of other patients.

Questions have also been raised regarding the salary of the doctor heading the hospital’s emergency department, who is reportedly linked to Tusk’s party.

Yet the same source warned that Morawiecki’s departure may have little long-term impact on the Civic Coalition.

They argued that PiS possesses a fiercely loyal electorate, whereas enthusiasm for Rozwój Plus could prove temporary.

“Look at the IBRiS poll for Rzeczpospolita,” another source said. “70% of PiS voters say they are voting for their ideal party. This core electorate accounts for about 70% of PiS’s current voters.”

A similar perspective prevails within PiS, where politicians contend that Morawiecki is chasing a voter base that may be too small to sustain a new party.

Speaking to Euractiv, Kurzejewski said:

“People do not want to vote for politicians who have been excluded from PiS. As for Law and Justice voters, they do not want to vote for those who betrayed them. That is why this project means Rozwój Plus will fail to clear the electoral threshold.”

Today’s event will therefore serve as an early test of whether Morawiecki can translate curiosity and institutional support into lasting political clout—or whether his departure will become merely another short-lived fracture on Poland’s crowded right wing.

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Ceuta migration crisis sparks diplomatic row as Italy demands Spain’s suspension from Schengen

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An influx of thousands of migrants entering Spain from neighboring Morocco has plunged the autonomous enclave of Ceuta into chaos since Wednesday, prompting fresh backlash against Prime Minister Pedro Sánchez’s immigration policies.

Local authorities warned on Wednesday that an increasing number of migrants were reaching Ceuta by sea.

Juan Jesús Vivas, the president of Ceuta, told reporters that the situation constituted “an absolute humanitarian and social emergency” and demanded that the central government take action.

The situation escalated further on Thursday as thousands of people entered Ceuta by land and sea, overwhelming reception centers.

Videos shared online showed individuals using wetsuits and life jackets to swim to shore.

In a statement posted Thursday on X, Sánchez announced that he was working with Moroccan authorities to restore order as quickly as possible and promised an immediate response.

The border chaos erupted just weeks after the Spanish Supreme Court issued a ruling preventing the direct deportation of migrants arriving by sea.

Sánchez’s political rivals laid the blame for the crisis directly on the prime minister. Santiago Abascal, leader of the right-wing Vox party, characterized the events as an “invasion,” while Alberto Núñez Feijóo, leader of the center-right People’s Party (PP), was also among those condemning the prime minister.

The developments drew additional criticism from anti-immigration figures across Europe, including Alice Weidel, co-leader of Alternative for Germany (AfD), and Manfred Weber, chairman of the European People’s Party (EPP), the largest group in the European Parliament.

“This proves one thing: the Migration Pact and return regulations must be put into force today, not tomorrow. Furthermore, Frontex must be strengthened,” Weber wrote.

Tensions have remained high in Spain since the Sánchez administration launched a program enabling undocumented migrants to apply for legal status and remain in the country. More than one million people have applied under the scheme.

This represents the most severe border crisis to hit Ceuta since 2021, when at least 8,000 people entered the territory from Morocco.

The autonomous Spanish cities of Ceuta and Melilla are the only EU territories sharing a land border with Africa.

Italian leaders demand Spain’s expulsion from Schengen

Meanwhile, the fiercest reaction to the migration crisis in Spain emerged from Italy. Top Italian politicians demanded that Spain be expelled from the Schengen Area as tensions continued to escalate.

Italian Prime Minister Giorgia Meloni said in a statement on X: “The images coming from Ceuta are shocking and demonstrate once again that uncontrolled illegal migration poses a real threat to the security of Europe’s borders.”

Meloni added that Italy was prepared to act, “including through extraordinary measures,” to protect its borders and guarantee the safety of its citizens.

Together with Deputy Prime Minister Matteo Salvini and Foreign Minister Antonio Tajani—the most senior ministers representing parties in the Italian right-wing coalition—Meloni demanded the suspension of the Schengen Agreement or the exclusion of Spain from the border-free zone.

Under the accord, individuals can travel freely between 29 signatory European countries.

However, several member states have reinstated checks at certain borders, as permitted under the agreement, citing migration risks.

Italy had previously temporarily reintroduced controls on its border with Slovenia to prevent smuggling and terrorism.

Tajani went beyond calling for Spain’s exclusion from Schengen, attributing responsibility for the events in Ceuta to the immigration policies of Spanish Prime Minister Pedro Sánchez, who had promised to legalize hundreds of thousands of undocumented migrants.

The minister characterized the policy as “profoundly wrong” and claimed it provided “an incentive for human trafficking.”

The remarks provoked a sharp reaction from Spanish Foreign Minister José Manuel Albares, who summoned the Italian ambassador to account for Tajani’s statements.

Replying to Tajani on X, the Spanish minister wrote: “This message is unbefitting the foreign minister of a partner and friendly country from whom we expect European solidarity, not partisan demagogy.”

Separately, European Commissioner for Migration Magnus Brunner, who is also an EPP member, stated that the European Commission supports Spain in protecting the integrity of its borders, including Ceuta, and is in contact with Spanish Interior Minister Fernando Grande-Marlaska regarding the matter.

A spokesperson stated that the Commission welcomed “the close cooperation established between Morocco and Spain to combat these migratory flows and to ensure the swift return of individuals who entered Ceuta illegally, in accordance with applicable rules.”

“When it comes to our cooperation with partner countries, Morocco is a key and reliable partner for the EU. In recent years, we have intensified our cooperation in the areas of migration and border management, as well as the fight against smuggling. We are currently working to turn our relations into a comprehensive and strategic partnership,” the spokesperson added.

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Rome’s hesitation over SAFE defense allocation draws frustration across EU

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Italy is delaying the execution of a €14.9 billion loan agreement under the European Union’s SAFE defense program, a hesitation that is preventing other member states from accessing unallocated funds.

The Italian government has failed to finalize the exact amount it intends to borrow due to an ongoing energy crisis and internal political debate, effectively holding other European nations “hostage” ahead of a year-end deadline for fund redistribution, according to a report by Euronews.

Rome had previously requested €14.9 billion in loans—an application that was swiftly approved by both the European Commission and the Council of the European Union. However, the administration has yet to issue a final decision regarding the exact amount it will draw down.

Italian Foreign Minister Antonio Tajani stated this week that his country has “reserved” the full €14.9 billion as a maximum threshold.

Tajani noted that the government will only determine the final loan volume toward the end of the year, adding that he expects the eventual figure to range between €6 billion and €9 billion.

Eastern bloc frustrates over indecision

Rome’s reluctance is causing growing irritation across Europe, Euronews reported. While 17 EU member states have completed their formal agreements with the European Commission, they remain unable to access unclaimed funds because of Italy’s position.

Eastern flank countries, including Poland and Lithuania, are facing particular constraints as they seek additional resources beyond their initial allocations.

Under SAFE framework regulations, all unspent resources must be redistributed by the end of the year. Euronews reported that if Italy continues to delay, the European Commission could formally restrict Rome’s application in September, opening the remaining pool of approximately €10 billion to applications from other member states.

The Security Action for Europe (SAFE) operates as an EU financing mechanism designed to provide low-interest loans to help member state governments bridge gaps in their military capabilities and maintain continued support for Ukraine.

Approved by EU ambassadors in May last year to support the bloc’s rearmament, the SAFE loan facility has a total capacity of €150 billion.

The program forms part of the broader €800 billion “ReArm Europe” initiative announced by the European Commission in March.

Energy crisis and domestic politics stall progress

Italy’s cautious approach stems from a combination of domestic political pressures and economic factors. The country is contending with the impact of rising energy costs linked to the closure of the Strait of Hormuz, leading the Italian government to request fiscal flexibility from the EU to handle energy expenditures.

Concurrently, Italy’s ruling coalition—comprising Fratelli d’Italia (Brothers of Italy), Lega (League), and Forza Italia—faces intensifying pressure from its far-right wing, which has criticized increased defense spending ahead of upcoming elections. Italy must hold its next parliamentary elections no later than Dec. 22, 2027.

Euronews previously reported in May that despite reserving €14.9 billion under the SAFE program, Rome subsequently decided to request only €4 billion to €5 billion to cover existing signed contracts.

Prime Minister Giorgia Meloni and Foreign Minister Tajani justified the move by emphasizing the need to prioritize the energy crisis. Rome missed the deadline to submit its SAFE projects after requesting budget flexibility from Brussels for energy spending.

“We cannot tell our citizens that there is only money for defense,” Meloni said regarding the situation.

Italian daily La Repubblica also reported persistent disagreements between Meloni and other EU leaders concerning Ukraine. At the end of June, Germany’s Frankfurter Allgemeine Zeitung (FAZ) reported that a draft text intended for consensus at the NATO Summit in Ankara envisioned maintaining annual support for Kyiv at €70 billion through 2027, matching the 2026 commitment level.

However, Italy withheld its approval for the draft, objecting to long-term financial commitments of that scale for Kyiv.

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