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2026-02-16 20:31:54
[German Bond Yields Fall for Sixth Consecutive Day, Longest Streak Since November 2024] ⑴ On Monday, Eurozone bond yields continued their decline, with the yield on the German 10-year bond falling slightly to 2.7539%, hitting its lowest level since early December last year. This marked the sixth consecutive trading day of decline, the longest losing streak since late November 2024. ⑵ Last week, the yield on the German 10-year bond fell by approximately 9 basis points, the largest weekly drop since March last year. This week started quietly, coinciding with holidays in the US and parts of Asia, but a flurry of economic data releases could influence expectations for the European Central Bank's policy. ⑶ Rainer Guntermann, interest rate strategist at Commerzbank, noted that German bonds may take a breather amid stabilizing risk sentiment and the US holiday, but the positive duration profile is expected to continue until Friday's data releases. (4) Andrzej Szczepaniak, senior European economist at Nomura, expects the data to be generally stronger than the consensus. If this is the case, the market's current pricing of an 8 basis point rate cut by December 2026 may be reduced by 2 to 3 basis points. (5) Money market bets on a December rate cut by the European Central Bank eased slightly on Monday, after rising to about 40% probability following Friday's US inflation data. The yield on German two-year government bonds, which is sensitive to interest rate expectations, remained largely unchanged at 2.0496%. (6) This week, the market will also be closely watching Friday's release of the US Personal Consumption Expenditures Price Index, which is widely regarded as a key reference for the Federal Reserve's decision-making.
