Germany's Fiscal Reform Sparks Surge in 10-Year Bond Yields

In a significant financial shift, Germany's 10-year bond yield has soared to 2.72%, marking its highest point since November 2023. This surge is attributed to the recent agreement by Chancellor-in-waiting Friedrich Merz and coalition partners to reform the constitutional debt brake, permitting defense spending to surpass 1% of GDP.

Proposed Infrastructure Fund to Stimulate Economy

Alongside the debt brake reform, a proposed €500 billion infrastructure fund aims to invigorate the economy over the next decade. This ambitious plan has led to a notable 18 basis points increase in the 10-year bond yield, reaching 2.66% by mid-morning CET.