Deutsche Bank Economist: Fed to Cut Rates, Expect 25 Basis Points
German commercial bank research rate strategist Rainer Guntermann said that German government bonds could stabilize early this week, as markets await the Federal Reserve's interest rate decision on Wednesday. "A new round of yield declines seems limited, as front-end valuations look overblown and are facing very optimistic disinflation hopes," he said.
The money market is divided on whether the Fed will begin its easing cycle with a 25 basis point or 50 basis point cut. Commerzbank economists expect the bank to cut rates by 25 basis points, "because the (Fed's) first priority will be to start the easing process, and then there will likely be a series of rate cuts." According to Tradeweb data, the 10-year German government bond yield fell 1 basis point to 2.141%.