Germany Bond Yield Lowest in Near 3 Months

The yield on the German 10-year bund fell to 1.8% to kick-off the December month, the lowest level since mid-September, and tracking US Treasury yields lower, after Fed Chair comments suggested the Federal Reserve will deliver a smaller 50bps increase in the fed funds rate when it meets in two weeks.

At the same time, traders now expect the fed funds terminal rate at 4.92% by the May meeting next year, below 5.05% seen before.

In Europe meanwhile, doubts persist whether the ECB will deliver a third straight 75bps increase or will also opt to slow the pace of rate increases.

Inflation rate in the Euro Area slowed more than expected in November and fell for the first time in over a year.

Smaller rates were also recorded in Germany, Italy and Spain but in France the inflation showed no signs of abating yet.