The yield on the German 10-year Bund surged to 1.7%, approaching the over 8-year high of 1.75% touched in June after the ECB raised its three main interest rates by a historic 75bps in its September meeting, as broadly expected, and signaled further rate hikes in the coming meetings to curb record-high inflation. On top of that, the central bank sharply raised its inflation projections to average 8.1% this year and 5.5% in 2023, and ECB President Lagarde stated that inflation expectations consistently above target warrant extra monitoring. Still, despite lowering growth expectations, council members refrained from forecasting a recession as the currency bloc is expected to grow by 3.1% in 2022 and 0.9% next year. In the meantime, investors continue to closely watch fresh measures by the EU to rein the surge in electricity prices and prevent shortages.
Historically, the Germany Government Bond 10Y reached an all time high of 9.13 in September of 1990. Germany Government Bond 10Y - data, forecasts, historical chart - was last updated on September of 2022.
The Germany Government Bond 10Y is expected to trade at 1.67 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 2.23 in 12 months time.