FX.co ★ German Yields Ease as Investors Await ECB Signals

The yield on Germany's 10-year Bund declined to 2.57%, remaining close to Friday's four-month low of 2.523%. This shift occurs as investors keenly focus on upcoming European Central Bank (ECB) speeches throughout the week, seeking insight into future policy directions—particularly from President Christine Lagarde. The ECB is set to enter its blackout period on Thursday before its rate-setting meeting next week. Amid this, broader market sentiment has improved due to emerging signs of reduced trade tensions between the U.S. and China, along with the likely resolution of the U.S. government shutdown expected by the week's end. In a significant diplomatic engagement, U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are slated to meet in Malaysia with an aim to prevent further escalation of U.S. tariffs on Chinese imports—a policy recently criticized by President Donald Trump as "unsustainable." Within the money markets, traders have heightened their expectations for rate cuts from both the ECB and the Federal Reserve. They are now fully anticipating a 25-basis-point reduction by the ECB by July 2026 and a minimum of two 25-basis-point cuts by the Fed by year-end.