German 10-Year Bond Yield Remains Close to 2-Month Low

German 10-year yields stood at 1.9%, remaining close to their lowest level since September 19th and heading for their third straight weekly fall, as investors hoped that central banks might not raise interest rates as much as previously thought amid cooling inflation pressures and fears of a global economic downturn.

Also, the gap between the 2-year and 10-year government bond yields touched -27 bps, the widest since October 1992, in a sign that investors expect the ECB to continue raising rates, before pausing or even cutting rates next year to support the economy.

Earlier this week, the ECB's meeting accounts showed that policymakers will continue tightening monetary policy to combat high inflation, even in the event of a shallow recession, but they are willing to pause the ongoing interest rate hikes if there is a prolonged and deep recession.

Elsewhere, the minutes from the Fed's latest meeting suggested it would likely soon be appropriate to slow the pace of interest rate hikes.