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2025-12-17 18:30:59
[German Bond Gains Retreat as Markets Confused by Overreaction to UK Inflation Data] ⑴ German bond prices have retreated to levels only slightly higher or even flat compared to Tuesday's settlement price, despite no significant selling pressure. ⑵ Traders are questioning why the market reacted so strongly to weak UK inflation data, even though UK bonds themselves performed strongly (still half a basis point higher than the settlement price). ⑶ In contrast, US Treasuries performed slightly weaker, with the 10-year US-German spread widening to 132.7 basis points, nearly 1.5 basis points wider than at the European close. ⑷ However, traders revealed that selling pressure in the US Treasury market itself was not significant, and the widening spread reflected more the difference in relative performance. ⑸ Current market conditions indicate a lack of clear unidirectional drivers in major bond markets, with investors reassessing the breadth and duration of the impact of major data releases.
