German Yield Curve Movement Amid ECB Policy Anticipation

The German yield curve saw a flattening on Monday as investors took a pause, awaiting pivotal euro zone PMI data and the European Central Bank's monetary policy decision slated for later this week.

Previously, the curve had steepened due to shifts towards expansionary fiscal plans in Germany, driving long-dated yields higher compared to steady short-dated yields. This trend indicates market forecasting of increased fiscal spending potentially resulting in a greater supply of government bonds and subsequent higher yields.

Economists predict that the ECB will keep rates unchanged on Thursday, with the potential for cuts in September. Concurrently, global tariffs negotiations continue, with investors eyeing developments closely. Recent suggestions by U.S. President Donald Trump for higher tariffs on the EU add to the financial market's focus on monetary policy and economic indicators.

(With inputs from agencies.)