Germany’s 10-year Bund yield climbed back above 2.8%, rebounding from a near one-month low of 2.792% reached on Wednesday, as investors weighed a stream of mixed economic data and its implications for the ECB’s policy outlook. Germany’s factory orders surged 5.6% in November, defying expectations for a 1.0% decline. In contrast, retail sales fell 0.6% over the month, the sharpest drop since May and well below forecasts for a 0.2% gain. Inflation added to the dovish signal, with Germany’s headline rate slowing to 1.8% in December, slipping below the ECB’s 2% target for the first time since September 2024. Across the broader euro area, consumer price inflation eased to a four-month low of 2.0%, further dampening expectations of an ECB rate hike by year-end. Commenting on the outlook, ECB Vice President Luis de Guindos noted on Thursday that, despite a “very high” level of uncertainty and frequent unexpected developments, the current level of interest rates remains “appropriate.”

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