Bund Yields at Highest Since October 2023

2025-12-22 09:54 By Joana Ferreira 1 min. read

Germany’s 10-year Bund yield held near 2.9%, its highest level since October 2023, supported by the European Central Bank’s hawkish stance and expectations of increased fiscal spending in Germany.

Last week, the ECB left interest rates unchanged for a fourth consecutive meeting and signaled that borrowing costs are likely to remain at current levels for some time, noting that the eurozone has weathered US tariffs better than anticipated.

Stronger-than-anticipated economic data also prompted the ECB to raise its growth outlook, now projecting eurozone GDP at 1.4% in 2025, up from 1.2%.

Looking ahead, Germany’s fiscal plans are adding further upward pressure on yields.

Lawmakers approved a €524 billion federal budget for 2026, including nearly €180 billion in borrowing, with increased defense and infrastructure spending, enabled by the lifting of the debt brake, set to provide additional economic stimulus.



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