The yield on Germany’s 10-year Bund ended May just above 2.5%, attempting to recover from its lowest level since May 8, as investors assessed a raft of economic data and its implications for the European Central Bank’s policy outlook.
Inflation held steady at 2.1% in May, matching April’s six-month low but slightly exceeding market expectations of 2.0%.
While services and core inflation eased slightly, goods inflation picked up due to a more moderate decline in energy prices.
Meanwhile, German retail sales fell by 1.1% in April, the first decline in four months and well below the anticipated 0.2% increase.
The latest data reinforce expectations that the ECB will cut interest rates by 25 basis points at its meeting next week.
Elsewhere, sentiment remained cautious after a US appeals court temporarily paused the block on former President Trump’s trade tariffs.