FX.co ★ Bund Yields Fall as Traders Scale Back ECB Rate-Hike Bets

Germany’s 10-year Bund yield ended the week near 3.5%, down from a peak of 3.57% on Tuesday, its highest level since June 2009, and recorded its first weekly decline since early August. The pullback came as traders scaled back expectations for additional ECB rate hikes, even as a more hawkish tone from the Federal Reserve threatened to reinforce global tightening prospects. Some analysts argued markets had overestimated the likelihood of further ECB increases, stressing that higher energy prices could curb growth and, in turn, ease inflationary pressures. At the same time, Brent crude fell for a third straight session as concerns about supply disruptions from Saudi Arabia receded, providing some relief on the inflation front. Money markets now price the ECB deposit rate at just below 2.9% by December, implying roughly a 50% probability of a second hike this year. By November 2027, rates are projected at 3.39%, down from 3.55% on Monday.