German Two-Year Bond Yield Rises Over 4 Basis Points

The front end is doing the work here: a 4.3bp move in two-year yields against barely a basis point on the ten-year points to repricing of near-term rate expectations rather than a shift in long-run growth or inflation views. The 3.2bp flattening of the 2/10 spread is the tell — the curve is losing steepness from the short end, not the long end. For anyone tracking the euro area's rates backdrop, whether the front end keeps leading and whether the curve continues to flatten from here is the open question.