German bond yields move lower, market reduces expectations of European Central Bank interest rate cut
The trends of German and British bonds have diverged, with German long-term bonds falling and fiscal worries lingering. British bonds have risen, and the asset swap curve is steepening. The money market has lowered expectations for a European Central Bank interest rate cut by as much as 4 basis points, with a further cut of 21 basis points expected by the end of the year, the lowest level since June 23. Traders are maintaining their expectations for the Bank of England interest rate, predicting a further cut of 51 basis points this year.
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