Germany’s 10-year Bund yield climbed to 2.83%, recovering from a one-month low of 2.78% hit on Wednesday, after data showed Europe’s largest economy returned to growth in 2025. GDP rose 0.2% last year, ending a two-year contraction, supported by household and government consumption, though ongoing weakness in manufacturing keeps the outlook fragile. With Eurozone inflation at target, markets continue to expect rates will remain on hold throughout 2026. ECB member François Villeroy de Galhau reiterated this week that expectations of a rate hike in 2026 are “fanciful.” Meanwhile in the US, investors weighed stronger-than-expected retail sales against a softer-than-expected core inflation reading, assessing the potential implications for rate cuts later this year.
