FX.co ★ Bund Yields Ease From Recent Highs

Germany's 10-year Bund yield declined to 2.69% following an earlier peak, marking a high not seen in over a month. This shift occurred as investors processed unexpectedly weak PMI data and accommodating comments from a Federal Reserve official. In November, German private-sector activity experienced a downturn, driven by slower growth in services and ongoing contraction within the manufacturing sector. Despite this, the outlook for the European Central Bank's (ECB) policy remains unchanged, with expectations that interest rates will remain stable through the next year. In the United States, the probability of a Federal Reserve rate cut in December increased to approximately 65%, following statements from New York Fed President John Williams, who generally aligns with the Fed Chair, indicating that easing might soon become necessary amid a cooling labor market. Additionally, market sentiment was swayed by reports suggesting potential progress towards a peace framework concerning Ukraine. These reports included claims that the U.S. and Russia have discretely considered a proposal involving Ukraine ceding the Donbas region and reducing its military presence.