FX.co ★ German Bund Yields Steady Near Two-Week High

Yields on Germany’s 10-year Bunds remained steady at 2.74%, nearing the peak level observed since early September, as investors evaluated a mix of PMI data and fiscal policy developments. The German composite PMI surged to 52.4 in September, surpassing the consensus forecast of 50.7, which signals the most rapid expansion in the private sector since May 2024, largely propelled by the services sector. Nonetheless, the manufacturing sector experienced a more pronounced contraction than anticipated. Additionally, yields have received further support from Germany's decision to increase bond issuance for the fourth quarter by €15 billion compared to the prediction made in December, due to escalated plans for spending on infrastructure and defense. Earlier this month, the European Central Bank indicated that the phase of rate reductions might have concluded, attributing persistent inflation risks to tariffs, service and food prices, and fiscal policy adjustments.