German short-term bond yields fell on Friday, and investors weighed the weak European economic outlook with strong US data. The ECB cut interest rates for the third time this year on Thursday, saying that inflation in the Eurozone is getting under control, and the economic outlook in the region is deteriorating. German two-year bond yields, which are more sensitive to ECB interest rate expectations, fell 1.5 basis points to 2.13%. According to money market pricing, the ECB's interest rate on deposit instruments is expected to be slightly below 2% in July 2025, which means that interest rates will be cut by 25 basis points at every meeting until next summer. The money market also expects a 100% chance of cutting interest rates by 25 basis points in December, and about 20% chance of cutting interest rates by 50 basis points. The yield on German 10-year bonds, an indicator of the Eurozone, rose 1 basis point to 2.21%.

German short-term bond yields fell on Friday, and investors weighed the weak European economic outlook with strong US data. The ECB cut interest rates for the third time this year on Thursday, saying that inflation in the Eurozone is getting under control, and the economic outlook in the region is deteriorating. German two-year bond yields, which are more sensitive to ECB interest rate expectations, fell 1.5 basis points to 2.13%. According to money market pricing, the ECB's interest rate on deposit instruments is expected to be slightly below 2% in July 2025, which means that interest rates will be cut by 25 basis points at every meeting until next summer. The money market also expects a 100% chance of cutting interest rates by 25 basis points in December, and about 20% chance of cutting interest rates by 50 basis points. The yield on German 10-year bonds, an indicator of the Eurozone, rose 1 basis point to 2.21%.