FX.co ★ Bund Yields at Highest Since October 2023

Germany's 10-year Bund yield remains close to 2.9%, marking its highest point since October 2023. This is buoyed by the European Central Bank's firm monetary policy stance and the anticipation of heightened fiscal expenditure in Germany. Recently, the ECB opted to maintain interest rates for the fourth straight meeting, signaling that borrowing costs are likely to persist at the current levels for a while. The ECB noted that the eurozone has managed better than expected against US tariffs. Additionally, robust economic data led the ECB to revise its growth forecast upwards, predicting eurozone GDP to reach 1.4% by 2025, an increase from the previous estimate of 1.2%. Looking forward, Germany's fiscal strategies are exerting further upward pressure on yields. Legislators have approved a €524 billion federal budget for 2026, which includes borrowing nearly €180 billion. The budget features increased allocations for defense and infrastructure, facilitated by the lifting of the debt brake, aimed to stimulate the economy further.