Germany’s 10-year Bund yield remained relatively stable at 2.87%, closely approaching the March 2025 peak of just above 2.9%. This stability comes as investors are keenly anticipating the European Central Bank's (ECB) policy announcement later today while assessing the implications of significant debt issuance. This year, Germany aims to accumulate a record €512 billion to fund infrastructure improvements and bolster defense capabilities.
The ECB is largely expected to maintain the current interest rates for the fifth consecutive meeting. Policymakers are likely to emphasize the deflationary pressures stemming from a robust euro and the influx of low-cost imports from China. ECB President Christine Lagarde is anticipated to affirm that current monetary policy is well-positioned, with market predictions indicating stable interest rates through 2026.
In recent reports, eurozone inflation showed a notable decrease in January, with the headline Consumer Price Index (CPI) dropping to 1.7%, the lowest since September 2024. Simultaneously, core inflation experienced an unexpected decline to 2.2%, marking its lowest point since October 2021.