Germany's 10-Year Bond Yield Climbs

In a significant financial development, Germany's 10-year bond yield has escalated to 2.72%, marking its peak since November 2023. This surge is attributed to the proposed fiscal reforms by Chancellor-in-waiting Friedrich Merz and his coalition partners.

Proposed Fiscal Reforms

The coalition has reached an agreement to amend the constitutional debt brake, a move that would permit defense expenditure to surpass 1% of GDP. Additionally, a €500 billion infrastructure fund has been proposed, aimed at invigorating the economy over the next decade.

Market Reaction

Following the announcement, the 10-year bond yield experienced a notable increase, jumping 18 basis points to 2.66% by 9:09 am CET, reflecting the market's response to the anticipated fiscal changes.