Germany’s 10-year Bund yield hovered around 2.6%, slightly below the six-week high of 2.69% reached on May 14th, as risk-off sentiment dominated markets and investors reassessed the global economic outlook, particularly in the United States.
Moody’s recently downgraded the US credit rating by one notch, from Aaa to Aa1, citing growing concerns over rising government debt and widening fiscal deficits.
This downgrade pushed US borrowing costs higher, with some spillover effects on global markets.
However, German bonds continue to attract inflows amid a broader shift away from US assets.
On the monetary policy front, the European Central Bank is widely expected to continue cutting interest rates in June.
Still, ECB Governing Council member Martins Kazaks signaled that rate reductions may soon come to an end, provided inflation aligns with the 2% target as projected.