German Bond Yields Decline Amid ECB Speculation

German government bond yields fell as investors focused on U.S. data and the ECB's upcoming policy meeting. Analysts anticipate a 25 bps ECB rate cut could signal a shift towards neutral rates. U.S. inflation data may impact Fed actions amid economic uncertainties and political developments in France.

German government bond yields experienced a decline on Monday as investors set their sights on crucial U.S. data and an impending European Central Bank policy meeting later this week.

The euro area's borrowing costs recently decreased, pressed by lackluster economic figures and market inflation expectations falling below 2%. Germany's 10-year yield, the euro area's benchmark, dipped 0.5 basis points (bps) to 2.11%, after recording its first weekly gain in over a month last Friday with a 6 bps rise.

Many analysts foresee a 25 bps reduction by the ECB on Thursday, with attention on the communication which might indicate the ECB's future directions. U.S. inflation figures set for release on Wednesday could sway expectations for the Federal Reserve's approach to monetary easing.

(With inputs from agencies.)