German 10-tear bund yield hits 3-month high as inflation surges

The yield on the German 10-year Bund increased to 2.4%, reaching a three-month high, as critical economic data weakened the rationale for the European Central Bank to continue cutting interest rates as aggressively as previously anticipated.

German 10-tear bund yield hits 3-month high as inflation surges

In October, the Eurozone's inflation rate rose to 2%, exceeding market expectations of 1.9%. This increase occurred as core components of the consumer price index unexpectedly failed to slow down, raising ongoing concerns about persistent inflation in services. Surveys indicated that inflation expectations among Euro Area households rebounded to their highest level since February, jeopardizing the central bank's efforts to control price growth.

Eurozone GDP grows 0.4%, surpassing expectations and reducing bond demand

Additionally, earlier reports showed that Eurozone GDP grew by 0.4% in the third quarter, significantly surpassing market expectations of a 0.2% increase, bolstered by stronger-than-expected performance from Germany and France. This favorable data allows for more restrictive rates and reduces demand for government bonds.