FX.co ★ Germany 10-Year Bond Yield Above 2.6%

Germany's 10-year Bund yield remained around 2.6%, just under the six-week peak of 2.69% seen on May 14th, due to market risk-aversion and a reassessment of the global economic outlook, particularly related to the United States. This shift was influenced by Moody's decision to downgrade the US credit rating from Aaa to Aa1, reflecting heightened concerns about increasing government debt and expanding fiscal deficits. The downgrade resulted in higher borrowing costs for the US, which had a ripple effect on international markets. Despite this, German bonds have continued to attract investments as investors move away from US assets. On the monetary policy front, the European Central Bank is widely anticipated to persist in reducing interest rates in June. Nevertheless, ECB Governing Council member Martins Kazaks indicated that rate cuts might soon conclude if inflation meets the projected 2% target.