Germany’s 10-year Bund yield dropped to 2.464%, its lowest level in over three weeks, as investors raised expectations for further rate cuts from the European Central Bank (ECB) following disappointing economic data.
Germany bund yield drops on ECB rate cut bets
Rising unemployment in Germany highlighted the ongoing challenges in Europe’s largest economy, while inflation figures from both German states and France pointed to a continued cooling in prices. In response, money markets adjusted their forecasts, predicting a drop in the ECB’s deposit rate to 1.93% by December 2025, down from a previous expectation of 2.05%.
ECB cuts rates again, Fed holds steady
This shift came just a day after the ECB’s fourth consecutive rate cut, as the bank reiterated that the Eurozone’s disinflation trend remains intact despite persistent inflationary pressures in the services sector. In contrast, the Federal Reserve kept rates on hold this week, signaling a potential pause in its tightening cycle.
