Germany's 10-year Bund yield has slightly surpassed 2.7%, maintaining its position near the highest level observed since late September, and is on track for a fifth consecutive weekly rise. This shift in investor sentiment is driven by increased attraction to riskier assets, bolstered by strong earnings from AI leader Nvidia. Investors are also anticipating the postponed U.S. jobs report for further insights into the Federal Reserve's policy direction. Additionally, the minutes from the latest Federal Reserve meeting have reduced the likelihood of a rate cut in December. In Europe, the European Central Bank (ECB) is broadly expected to maintain steady interest rates throughout the coming year.
In a separate development, the European Commission has updated its forecast for Germany's GDP, predicting a growth of 0.2% in 2025, an upward revision from the previous forecast of a -0.2% contraction in the spring. The economy is expected to rebound with a growth of 1.2% in 2026 and 2027, driven by increased public spending despite ongoing trade tensions. Meanwhile, Germany's Council of Economic Experts has adjusted its growth forecast for 2026 down to 0.9% from 1.0%, falling short of the government's projection of 1.3% after the economy experienced near-stagnation in 2025.
