FX.co ★ German Bund Yield Slightly Down as Investors Digest Key Data

Germany's 10-year Bund yield has inched down towards 2.45% as investors assess fresh economic figures and keep an eye on potential changes in U.S. tariff policies. In the first quarter of 2025, Germany's economy expanded by 0.2%, recovering from a 0.2% decline in the last quarter of 2024. This growth was underpinned by heightened domestic demand due to easing inflation, reduced borrowing costs, and a positive outlook following the establishment of a stable government, alongside anticipated increases in public expenditure. On the inflation front, headline inflation decreased for the second consecutive month to 2.1% in April, even as core and services inflation saw an uptick. Concurrently, the European Central Bank reduced its deposit rate by 25 basis points to 2.25%—its lowest level since early 2023—and removed references to a “restrictive” policy stance. This was in response to warnings of a worsening economic outlook driven by escalating trade conflicts. Overall market sentiment remains unstable, burdened by a growing fear of a global recession stemming from the Trump administration’s tariff strategy.