FX.co ★ German Bund Yield Jumps as ECB Cut Bets Ease

Germany's 10-year Bund yield climbed above 2.65%, recovering from its month-low, as investors adjusted their forecasts regarding European Central Bank's rate cuts. This adjustment occurred after U.S. President Donald Trump's decision to delay several tariffs took effect, despite increasing duties on Chinese imports to 125% from 104%. This action relieved some concerns over a potential global economic downturn and rising inflation but simultaneously introduced prolonged uncertainty that could impact market sentiment for an extended period. In response, money markets adjusted to anticipate an ECB deposit facility rate of 1.8% by December, compared to 1.65% on Wednesday and 1.9% last week. Additionally, the likelihood of an ECB rate cut in April decreased to 90%, down from full pricing the day before. In domestic political developments, Germany's conservative bloc, under the leadership of chancellor-in-waiting Friedrich Merz, successfully reached a coalition agreement with the center-left SPD, setting the stage for a new government.