Germany 10Y Bond Yield Off 2-Year Highs

2025-12-23 13:08 By Luisa Carvalho 1 min. read

Germany’s 10-year Bund yield was around 2.87%, easing from the two-year high of 2.90% reached on December 22, as the global sell-off paused, while investors continued to weigh the outlook for monetary policy.

The ECB left interest rates steady for a fourth meeting and signaled that borrowing costs are likely to stay at current levels for some time, as growth remains resilient and inflation hovers around the 2% target.

Hawkish policymaker Isabel Schnabel clarified she does not see an immediate need for a rate hike, but persistent inflationary pressures indicate that borrowing costs should not be lowered, with markets currently pricing in about a 40% chance of a March 2027 hike.

Meanwhile, concerns over Germany’s fiscal sustainability subsisted as lawmakers approved a €524 billion federal budget for 2026, including nearly €180 billion in borrowing.

The Bundesbank cautioned that Germany faces its largest deficit since reunification and called for swift action to control public finances.



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