Germany’s 10-year Bund yield edged down to 2.84% in thin holiday-season trading, remaining just below last week’s nine-month highs.
Investors digested geopolitical news after US President Trump said a deal to end the war in Ukraine is “closer than ever,” while key issues over the eastern Donbas region remain unresolved.
Market attention also focused on changes to the Netherlands’ occupational pension system, the EU’s largest, which will begin transitioning to a new framework on January 1, enabling the nearly €2 trillion sector to invest in riskier assets.
The Bund yield is on track to finish 2025 about 50 bps higher, marking its largest annual rise since 2022, supported by the European Central Bank’s hawkish stance, expectations of sustained rates, and anticipated fiscal stimulus in Germany.
Lawmakers approved a €524 billion federal budget for 2026, including nearly €180 billion in borrowing, with higher defense and infrastructure spending enabled by the lifting of the debt brake.