FRANKFURT / LONDON (IT BOLTWISE) – German federal bonds are under pressure after surprisingly positive economic data from the Eurozone was published. The Euro Bund future fell by 0.28 percent, while the yield on ten-year Bunds rose to 2.62 percent. These developments raise questions about the European Central Bank’s future monetary policy.
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German federal bonds fell in value on Friday, reflecting the release of unexpectedly positive economic data from the euro zone. The Euro Bund future, an important indicator for the development of the bond markets, fell by 0.28 percent to 129.53 points. At the same time, the yield on ten-year federal bonds rose to 2.62 percent, indicating increased demand for higher yields.
The latest data on business sentiment in the Eurozone surprised markets. The Purchasing Managers’ Index, an important indicator of economic activity, reached its highest level since May 2024 in October. Sentiment has improved significantly, particularly in the service sector in Germany and the Eurozone as a whole. These developments fuel hopes that the euro area economy could gain momentum in the coming months.
Ralph Solveen, an expert at Commerzbank, commented that the continued upward trend in the purchasing managers’ index is a positive signal for the economic recovery in the euro area. He expects that the German economy could grow above average due to the expansionary financial policy, even if a strong upswing remains unlikely. This view is supported by recent developments in commodity markets, where rising oil prices are fueling inflation expectations.
The prospect of further key interest rate cuts by the European Central Bank (ECB) is dampened by increased inflation expectations. The inflation data from the USA published in the afternoon, however, had little impact on the bond market. Consumer prices rose 3.0 percent year-on-year in September, slightly below economists’ expectations. Nevertheless, it is expected that the US Federal Reserve could cut interest rates again next week, which is likely to influence global financial markets.
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