08.01.202610:04:46UTC+00Bund Yields Rebound

Germany's 10-year Bund yield has again surged past 2.8%, having previously dipped to a nearly one-month low at 2.792% on Wednesday. This movement reflects investor reactions to a mix of economic data and their potential impact on the European Central Bank’s (ECB) policy direction. In an unexpected development, Germany's factory orders jumped by 5.6% in November, contrary to predictions of a 1.0% decrease. Conversely, retail sales experienced a 0.6% drop over the same period—the most significant decline since May—falling short of the anticipated 0.2% increase. Adding to dovish sentiments, Germany's headline inflation rate decreased to 1.8% in December, marking the first instance of falling below the ECB’s 2% target since September 2024. In the broader eurozone, consumer price inflation also decelerated to a four-month low of 2.0%, reducing the likelihood of an ECB rate hike by year's end. ECB Vice President Luis de Guindos remarked on Thursday that despite persistent high uncertainty and frequent unexpected events, the current interest rate levels remain "appropriate."