FX.co ★ Bund Yield Unchanged as Mixed Data Leaves ECB Path Unchanged

The yield on Germany’s 10-year Bund remained slightly below 2.7% as investors analyzed a mix of economic indicators for insights into the European Central Bank's (ECB) future policy decisions. Retail sales in October fell by 0.3%, falling short of expectations for a 0.2% increase, illustrating ongoing weakness in domestic demand. Inflation was steady at 2.3% in November, slightly lower than predicted, whereas the EU-harmonized rate increased to 2.6%, the highest since February and above the ECB's 2% target. Coupled with ECB meeting minutes suggesting no immediate need to ease policies, these figures kept market expectations stable, with investors not forecasting any rate changes until 2026. Concurrently, lawmakers in Berlin are anticipated to pass Germany’s 2026 budget, concluding protracted political negotiations. This marks a departure from the long-standing “black zero” policy, indicating a shift toward increased borrowing to fund significant programs. In parallel, the Federal Reserve in the United States is anticipated to implement a third rate cut in December.