FX.co ★ German Bund Yield Falls From 5-Week High

Germany's yield on the 10-year Bund decreased to 2.64%, retreating from a recent peak of 2.699% over a five-week period. This shift occurred as global investors examined new economic data from the United States, prompting a reassessment of the Federal Reserve's policy stance. In April, US retail sales experienced a significant slowdown, while producer prices unexpectedly declined, primarily due to a fall in trade margins. These factors underscore the economic implications of tariffs enacted during President Trump's administration. Concurrently, Federal Reserve Chairman Jerome Powell warned that long-term interest rates might remain high and inflation could become more unpredictable due to increasingly frequent supply chain disruptions. In Europe, the money markets anticipate that the European Central Bank's deposit facility rate will reach 1.79% by the end of the year, assigning a 95% likelihood to a rate cut in June. This is part of the ECB's strategy to bolster economic growth amid escalating trade barriers. ECB policymaker Villeroy de Galhau indicated there is potential for an additional rate reduction by summer, while colleague Nagel expressed a "good probability" that inflation would align with the ECB's 2% target.