The yield on Germany’s 10-year Bund briefly climbed to 2.87% on December 22, 2025, marking its highest level since March 2025. The move reflects renewed market concerns over inflation persistence and a potential delay in European Central Bank rate cuts.
- Bund yield reached 2.87% on December 22, 2025, its highest since March 2025
- GER10Y yield rose over 35 basis points within a month
- EUR/USD climbed to 1.0950 amid yield-driven capital inflows
- ECB rate cut probability fell to 40% for March 2026
- EUROSTOXX50 showed early risk-off reaction
- Financials and real estate sectors underperformed
The German 10-year Bund yield spiked to 2.87% during early European trading on December 22, 2025, its highest since March of that year, before settling slightly lower. This sharp increase reflects growing investor skepticism about the European Central Bank’s timeline for easing monetary policy, despite recent inflation data showing resilience in core consumer prices. The yield surge comes amid a broader repricing of Eurozone debt, with the GER10Y benchmark now indicating higher expected interest rates over the medium term. The EUR/USD pair strengthened to 1.0950 in response, as higher German yields attracted capital flows into the euro. Meanwhile, the EUROSTOXX50 index posted a modest decline, signaling early risk-off sentiment across European equities. The rise in Bund yields is particularly notable given that the average yield for the benchmark had remained below 2.5% through most of Q4 2025. The 37-basis-point increase from the prior month’s low underscores a significant shift in market expectations. Financials and utilities, sectors sensitive to interest rate changes, saw underperformance, while real estate equities faced downward pressure due to higher financing costs. Market participants are now recalibrating forecasts for the ECB’s next policy move, with futures pricing in a 40% probability of a rate cut in March 2026—down from over 60% just one week prior.