FX.co ★ German Bund Yields Rise as US Fiscal Fears Mount

Germany's 10-year Bund yield increased slightly to 2.66%, and the 30-year yield climbed to a more than two-month high of 3.18%. This rise reflects growing investor concerns regarding the deteriorating fiscal outlook in the US, especially following the narrow approval of President Trump's tax-cut legislation in the House on Thursday. This bill, which proposes a $4 trillion increase to the US debt ceiling, will now proceed to the Senate, where it faces calls for substantial amendments from various Republican groups. Further pressure in the bond market was induced by weak demand at a $16 billion 20-year Treasury auction, intensifying worries in the wake of Moody's downgrade of the US credit rating. Meanwhile, in Europe, investors weighed mixed economic signals. Germany's Ifo Business Climate Index rose to 87.5 in May, the highest since June 2024 and slightly above expectations, indicating a modest reduction in business uncertainty. Nevertheless, PMI data revealed an unexpected contraction in Germany's private sector, with declines noted in both manufacturing and services output.