Market Outlook: ECB Rate Cut Expected to Support German Government Bonds

Forex - Commerzbank Research strategists stated that German Bunds (government bonds) are expected to be supported by the European Central Bank's anticipation of a 25 basis point interest rate cut and likely lower growth and inflation forecasts. Erik Liem and Michael Leister noted, “Today's market focus will be on the ECB, setting the stage for a 25 basis point cut that is fully discounted by forwards.” The strategists also mentioned that a larger cut could be discussed, with money markets anticipating a small probability for this, adding, “such a surprise would create a sense of panic that ECB President Christine Lagarde seeks to avoid.” The 10-year Bund yield opened slightly changed at 2.17%.