German 10-year Bund yield little changed

Germany’s 10-year bund yield held near 2.77% on Tuesday, staying close to its highest level since March, as investors weighed geopolitical developments and upcoming economic data.

Optimism over diplomacy gained traction after NATO Secretary General Mark Rutte described U.S. President Donald Trump’s meeting with Ukrainian President Volodymyr Zelenskiy and European leaders as “very successful.”

Trump later revealed that he had spoken with Russian President Vladimir Putin to arrange a follow-up meeting with Zelenskiy, with a trilateral summit under discussion. Hopes for a pathway toward peace in Ukraine improved risk sentiment but were not enough to drive a meaningful move lower in German yields, which remained anchored amid uncertainty about the durability of negotiations.

On the policy side, European Central Bank expectations stayed steady, with markets assigning little chance of a policy change at the September meeting. Investors continue to anticipate a prolonged pause after the ECB’s recent easing cycle, given that Euro Area Q2 GDP eked out only 0.1% growth and inflation has held steady at 2%, right in line with the central bank’s target.

Market focus now turns to upcoming flash PMI surveys across the eurozone, which will provide fresh insight into the trajectory of business activity. With manufacturing still under pressure and services showing tentative resilience, the data could shape expectations for how long the ECB holds rates steady before reassessing. A weaker PMI outcome could rekindle discussion of further accommodation, while stronger readings may reinforce the current “on hold” stance.

Across the Atlantic, traders are positioning around the Federal Reserve’s September 16–17 meeting, where the probability of a 25-basis-point cut stands at roughly 85%. Some investors are even speculating about the possibility of a larger half-point move, depending on the tone of Fed Chair Jerome Powell’s speech at Jackson Hole on Friday. A dovish pivot from Powell could weaken the dollar, strengthen the euro, and put additional upward pressure on bund yields as U.S.–German rate differentials narrow.

In the short term, bund yields appear caught between optimism over geopolitical de-escalation, weak but stabilizing eurozone growth, and global central bank divergence. The next key catalysts will be euro area PMI data and Powell’s Jackson Hole remarks, which together could set the tone for bond markets into September.