FX.co ★ Bund Yields Steady Above 2.5% as ECB Signals Policy Caution

The yield on the German 10-year Bund remained slightly above 2.5% as investors considered recent statements from European Central Bank (ECB) officials regarding future policy directions, while also awaiting more information on a framework agreement designed to resume US-China trade relations. ECB policymaker François Villeroy de Galhau highlighted the central bank's ability to rapidly adjust interest rates, even after implementing its eighth consecutive cut—a decision he characterized as normalizing monetary policy. Although the ECB's latest rate reduction was largely expected, President Christine Lagarde suggested that the easing cycle might soon conclude. The deposit facility rate is currently set at 2%, following a decrease in Eurozone inflation to 1.9% in May 2025. Meanwhile, the Eurozone's economy expanded by 0.6% in the first quarter of 2025, recording its most robust quarterly growth since the third quarter of 2022.