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2025-12-15 19:11:50
[Eurozone Bond Yields Fall Ahead Global Central Bank Decision Week, Markets Hold Their Breath] ⑴ Eurozone bond yields edged lower on Monday as markets remained cautious ahead of a packed week of global central bank policy meetings and key US data. ⑵ The yield on the German 10-year bond, the eurozone benchmark, fell 2 basis points to 2.84%. Last week, the yield touched 2.894%, its highest level since mid-March. ⑶ The European Central Bank (ECB) and the Bank of England (BOE) will announce their interest rate decisions on Thursday, while the Bank of Japan (BOJ) will do so on Friday. Citigroup expects the ECB to adopt a hawkish stance of holding rates steady, downplaying the impact of missed inflation targets. ⑷ Market pricing indicates that traders anticipate a possible ECB rate cut in 2026, but also believe there is about a 25% probability of a rate hike by December 2026 and about a 50% probability by March 2027. ⑸ Investors are also awaiting US employment data to be released on Tuesday to assess the Federal Reserve's policy outlook. The 10-year US Treasury yield fell 2.5 basis points to 4.17% in London trading. (6) Long-term bond supply pressure remains; the German 30-year yield fell 2.5 basis points to 3.46%, after hitting 3.498% last Friday, the highest since July 2011. The market expects Germany to increase its bond issuance next year, and Dutch pension fund reforms will reduce demand for ultra-long-term bonds. (7) The Italian 10-year yield fell 4 basis points to 3.52%. The French 10-year yield fell 3 basis points to 3.55%, with a 70 basis point spread over German bonds; the market is focused on the final approval of its 2026 budget.
