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Euro zone bond yields rise after ECB takes positive view on economy

BY Reuters | ECONOMIC | 12/18/25 08:34 AM EST

Dec 18 (Reuters) - Euro zone government bond yields edged up and traders increased their bets on future European Central Bank rate hikes, following the ECB's widely anticipated decision to keep rates unchanged. The ECB took a more positive view on the euro area economy that has shown resilience to global trade shocks.

Germany's 10-year yields, the euro area's benchmark, were up 1.5 basis points (bps) at 2.88%. They hit 2.894% last week, their highest level since mid-March. Money markets priced in an around 20% probability to a tightening move by December 2026 and a 45% chance by March 2027, respectively from 12% and 35% before the statement.

Traders assigned over 50% probability of a tightening move in March 2027 last week. The ECB depo rate is currently at 2%.

(reporting by Stefano Rebaudo; editing by Alexandra Hudson)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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