FX.co ★ German Bund Yields Hit Two-Month High

Germany's Bund yield has surpassed 2.75%, hitting its peak since September 25, as recent inflation data came in slightly above expectations, dampening hopes for a rate cut from the European Central Bank (ECB) in the near future. The surge follows a nearly 6 basis point rise on Monday, tracking increases in U.S. and Japanese government bond yields, after Bank of Japan Governor Ueda suggested the possibility of a rate hike later this month. Eurostat reported Eurozone inflation climbed to 2.2% in November, slightly exceeding the 2.1% forecast. Coupled with recent ECB minutes showing a lack of urgency among policymakers to ease policy, the market's expectations remain unchanged, with investors widely predicting no changes in rates until 2026. In Germany, lawmakers have approved the 2026 federal budget, concluding months of political stalemate. This marks a departure from the traditionally adhered-to “black zero” balanced-budget rule, opting instead to increase borrowing to support significant government initiatives.