FX.co ★ Bund Yield Rises on Hawkish Central Banks and Inflation

Germany's 10-year Bund yield exceeded 2.65%, reaching its highest point since October 9th. This increase is attributed to investors responding to hawkish indications from both the European Central Bank (ECB) and the Federal Reserve, in conjunction with a German inflation rate that was stronger than anticipated. In October, the ECB opted to leave rates unchanged for the third consecutive meeting, adhering to a data-dependent strategy while noting the inflation outlook had not significantly altered. Concurrently, the Federal Reserve reduced interest rates by 25 basis points, though Federal Reserve Chair Jerome Powell warned that additional easing in December is not guaranteed. In terms of economic data, German inflation reduced to 2.3% in October but was less pronounced than expected. Moreover, the German economy showed stagnation, largely due to declining export levels.