FX.co ★ German Bund Yields Steady Amid Growth Concerns

Germany's 10-year Bund yield has steadied at approximately 2.65% amid growing concerns about the nation's economic future and uncertainty surrounding monetary policies. On Wednesday, the German Council of Economic Experts revised its growth forecast for 2026 downward to 0.9%, a slight decrease from the previous estimate of 1.0% set in May, and more pessimistic than the government's projection of 1.3%. This revision comes after forecasts of nearly stagnant growth in 2025, which are still anticipated to be a modest 0.2%. These figures raise questions about the effectiveness of Germany's proposed fiscal spending initiatives. Regarding monetary policy, money markets currently indicate a roughly 40% likelihood of a 25 basis point rate cut by the European Central Bank by September 2026, with the key rate expected to remain around 1.97% by March 2027. In the United States, investors have adjusted their expectations concerning a potential rate cut by the Federal Reserve in December, now anticipating about a 50% chance in light of the government's reopening, signals of a weakening labor market, and differing opinions among Fed officials.