FX.co ★ Bund Yields Stabilize as Investors Digest EU Growth Forecasts

Germany's 10-year Bund yield has settled at approximately 2.7%, marking its highest point since early October. This comes as investors analyze the latest economic projections from the European Commission and prepare for a wave of delayed US economic data, including the September employment report, to gain further insight into the Federal Reserve's policy trajectory. The European Commission has adjusted its economic outlook for Germany, now predicting GDP growth of 0.2% in 2025, an improvement from the previously anticipated -0.2% in the spring. They also project a recovery to 1.2% growth in both 2026 and 2027, driven by enhanced public expenditure, with partial offsets due to trade tensions impacting exports. Simultaneously, the German Council of Economic Experts has slightly reduced its 2026 growth forecast to 0.9%, down from the 1.0% estimated in May, displaying more caution compared to the government's 1.3% forecast following near-zero growth anticipated in 2025. Regarding monetary policy, the European Central Bank is expected to maintain current interest rates for the foreseeable future. Meanwhile, US financial markets now assign only a 40% probability to the Federal Reserve implementing a rate cut in December, following a series of hawkish statements from FOMC members.