30.01.202611:30:28UTC+00German Bund Yields Below Recent 10-Month Highs

Germany's 10-year Bund yield closed at 2.85%, declining from its near 10-month peak. Investors are now turning their attention to the upcoming European Central Bank (ECB) meeting, where policymakers are anticipated to consider the deflationary effects a stronger euro might have on future policy decisions. The euro recently reached a 4½-year high, surpassing $1.20 at the end of January, following a statement from US President Trump indicating his indifference towards the dollar's recent depreciation. Concurrently, ECB policymaker Martin Kocher warned that should the euro continue to appreciate, the central bank might consider resuming interest-rate cuts. Reflecting these evolving expectations, money markets are now indicating approximately a 30% likelihood of a rate cut by September, up from less than 10% the previous week, while the chance of a rate hike in April 2027 has decreased to 20% from an earlier 50%. On the economic data front, Germany's economy grew by 0.3% in the fourth quarter of 2025, slightly exceeding the forecast of 0.2%, which lends mild support to the market outlook.