Germany 10-Year Yield Falls for 5th Session

Germany’s 10-year Bund yield fell to 3.412%, its lowest level since September 8, extending the decline for a fifth consecutive session as investors sought the relative safety of German government debt. Demand has been supported by renewed concerns over sovereign risk in the Eurozone, particularly following last week’s sharp bond-market sell-off. France remains a key source of uncertainty, with investors questioning the government’s ability to reduce its budget deficit and secure parliamentary backing for its fiscal plans ahead of next year’s election. Political concerns have also spread to Spain after PM Sánchez called a snap election following Congress’s rejection of housing measures. At the same time, Eurozone inflation accelerated to 3.8%, the highest since September 2023 and well above the ECB’s 2% target, largely due to higher fuel prices. Markets now expect one 25-basis-point rate hike by December, with a smaller chance of another, and see the deposit rate near 3.4% by late 2027.