The rate fell 8 basis points to 1.89 per cent, the lowest since at least December 2022, after recently breaching the 2 per cent level for the first time since March.
Near midday in New York, the US 10-year yield was 8 basis points lower to 3.81 per cent.
German bonds have been on a rally since late October as soft euro-area economic data and a slowdown in inflation suggest European Central Bank policymakers won’t hold rates high for much longer.
Money markets imply 168 basis points of cuts from the ECB next year, which means six quarter-point reductions are fully priced and there’s a 70 per cent chance of a seventh one. That compares to bets on just three cuts about a month ago.
Still, the euro’s advance may be limited, according to Helen Given, an FX spot trader at Monex USA.
“The holiday rally will fade a bit heading into the first quarter,” she said. “The euro appears to be quite overbought, and with the German economy on the brink, it appears that the danger of a regional recession is quite a bit higher there than it is here in the US.”
As for the dollar, there’s also a strong seasonal tendency for it to weaken at the end of the year due partly to corporate activity.
Bloomberg
