Bund Yields Rise Amid Economic Uncertainty

Bund yields climbed following the ECB's decision to hold rates steady and concerns about the timing of Germany's spending plans. German economic forecasts were lowered, sparking market adjustments on expected rate cuts. Yields in Germany and Italy showed modest increases amidst heightened expectations for future rate strategies.

Bund yields experienced an uptick on Thursday as the European Central Bank maintained its current stance, leading to heightened market anticipation over Germany's economic outlook. Recent data amplified uncertainty around when Germany's planned spending boost would impact the economy.

The yields are lingering near levels observed before Germany's political agreement in March to increase defense and infrastructure spending. Notably, Germany's 10-year yields reached 2.65%, a slight increase from January's 2.63%.

Economic developments led Germany's economic experts to lower their forecasts for 2026, while traders adjusted their expectations for euro area interest rate movements. Italian government bonds also saw increases, narrowing the spread against German Bunds to its tightest since 2010.

(With inputs from agencies.)