The German 10-year Bund yield was little changed at around 3.42%, hovering near a five-week low, and was down nearly 7 bps for the week. The move tracked a global decline in borrowing costs as expectations for further monetary policy tightening eased. Remarks by Fed Chair Warsh at the IMF summit were widely interpreted as signaling that the Federal Reserve is likely to keep rates unchanged this month, despite inflation data coming in hotter than expected.
In Europe, comments from ECB President Lagarde supported a cautious, wait-and-see stance. Lagarde noted that elevated inflation in the Eurozone has been driven “predominantly, but not exclusively” by a surge in energy prices following the Iran war. She added that there were still no clear signs of “second-round effects” feeding through to broader prices but stressed that the ECB would closely monitor early indicators, particularly wage demands in trade union negotiations. The ECB has raised interest rates twice in the past four months, and markets are currently pricing in another hike in December.
