FX.co ★ German Bund Yields Rise as Global Uncertainty Fuels Market Caution

Germany's 10-year Bund yield surged past 2.65%, marking its highest point since May 14. This uptrend comes amidst a wave of global caution affecting markets. Investor concerns have been growing over the worsening fiscal outlook in the United States, rising bond yields in Japan, and unexpectedly high inflation rates in the UK. On the US front, debates surrounding a proposed tax-cut bill have exacerbated fears that the budget deficit may deteriorate more rapidly than previously thought. This follows Moody’s recent downgrade of the US credit rating owing to escalating government debt and expanding fiscal shortfalls. Meanwhile, UK consumer prices saw a 3.5% year-on-year increase in April, the sharpest since January 2024 and exceeding the projected 3.3%. This development has cast doubt over a potential summer interest rate reduction by the Bank of England. Adding to the prevailing uncertainties is the European Central Bank’s Financial Stability Review for May 2025, which highlighted mounting risks to stability in the eurozone, citing rising geopolitical tensions and ongoing policy uncertainties.