FX.co ★ German Bund Yields Slide to One-Month Low

The yield on Germany’s 10-year Bund has continued its descent towards 2.8%, marking its lowest point since early December. This decline follows a spate of disappointing economic data and precedes the anticipated Eurozone inflation report expected later today. Notably, German retail sales experienced a significant fall of 0.6% in November, representing the steepest decline since May and conflicting with market predictions of a 0.2% increase. Earlier data also revealed that annual inflation in Germany, Europe’s largest economy, decreased to 1.8% in December from 2.3% in November. This figure not only fell short of expectations but also dipped below the European Central Bank’s (ECB) 2% target for the first time since September 2024. Concurrently, France reported a milder-than-anticipated rise in consumer prices, contributing to the overarching narrative of diminishing inflationary pressures within the eurozone. Consequently, money markets are now suggesting a near-zero probability of an ECB interest rate hike by December 2026.