Germany’s 10-year Bund yield declined further toward 2.8%, reaching its lowest level since early December, after a run of weaker-than-expected economic data and ahead of Eurozone inflation figures due later today. German retail sales fell by 0.6% in November, the sharpest drop since May, defying market expectations for a 0.2% increase. The move followed earlier data showing annual inflation in Europe’s largest economy eased to 1.8% in December from 2.3% in November, undershooting forecasts and falling below the ECB’s 2% target for the first time since September 2024. Meanwhile, French consumer prices also rose less than expected, adding to the broader signs of easing inflation in the eurozone. As a result, money markets are now pricing in an almost zero probability of an ECB rate hike by December 2026.
