Sharpest Weekly Rise in German Bond Yields Amid Fiscal Pressures

German ultra-long-dated bond yields are experiencing their sharpest weekly rise in nearly two months. Economists predict increased euro area fiscal spending following Germany's investment plans, while geopolitical tensions elevate defense spending across Europe. The overall trend points to steeper yield curves amid mixed economic indicators.

German ultra-long-dated bond yields are poised for their most significant weekly increase in nearly two months, driven by mounting supply pressure despite mixed economic signals from the Purchasing Managers' Index (PMI). Economists foresee heightened fiscal spending across the euro area, following Germany's ambitious investment strategies.

Germany's 10-year government bond yield, serving as the euro zone's benchmark, edged up to 2.89% as the German economy recorded its fastest business activity growth in three months, contrasted by slower expansion in the euro zone and a contraction in France. Meanwhile, the 30-year yield remained stable at 3.49%, primed for a 7 basis point weekly climb.

A cautious stance from the Bank of Japan has recently propelled short-term government bond yields to a 30-year peak, while marking a decline in 30-year borrowing costs. Market dynamics and fiscal policies suggest a continued trend towards steeper bond yield curves, according to European rate strategists.

(With inputs from agencies.)