Steep Rise in German Bond Yields Amid Investment and Defense Spending Surge

German bond yields are experiencing a significant increase, driven by continued bond supply and heightened fiscal spending expectations. Germany's unveiling of landmark investment plans and rising defense expenditures across the eurozone bolster this trend. The Bank of Japan's recent moves also impact global bond markets.

On Friday, German ultra-long-dated bond yields surged, driven by ongoing bond supply pressure and anticipations of increased fiscal spending in the euro area, following Germany's announcement of landmark investment plans. Investors are attentively monitoring upcoming PMI figures for further insights.

Germany's 10-year government bond yield, a benchmark in the euro area, remained flat at 2.88%, while the 30-year yield decreased by 0.5 basis points to 3.49%. This week marks the steepest rise since early December as geopolitical tensions prompt increased defense spending across the bloc.

Meanwhile, significant signals from the Bank of Japan led to a surge in short-term bond yields to a thirty-year peak, despite a minor drop in 30-year borrowing costs. In Italy, 10-year government bond yields slightly decreased, with the bond yield gap indicating tightening trends since August 2008.

(With inputs from agencies.)