Germany’s 10-year Bund yield eased to 2.6%, slightly down from a six-month high, after data showed the German economy contracted by 0.2% in 2024, marking a second consecutive annual slowdown, as expected. Investors remain cautious, particularly after a report revealed that President-elect Donald Trump’s incoming economic team is considering a gradual increase in trade tariffs. The strategy being discussed involves monthly tariff hikes of 2% to 5%, rather than sudden, large increases, which could help prevent inflation spikes. Rising yields reflect reduced expectations for central bank rate cuts, with investors now focusing on the ECB’s December meeting minutes and upcoming Eurozone inflation data for clues on future policy.
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