Government bonds' spread between long, medium, and short maturity in Germany 2025

As of January 7, 2025, Germany's bond market displayed a positive spread of 28.1 basis points between 10-year and 2-year yields, indicating long-term rates above short-term ones. The 5-year versus 2-year spread was also positive, at 7.8 basis points. On the other hand, the 2-year versus 1-year spread was negative, at -15 basis points, suggesting a mildly inverted yield curve in shorter maturities.

Negative spreads indicate a (partially) inverted yield curve. This often signals investor pessimism about short-term economic prospects, as investors seek the relative safety of long-term bonds, pushing those yields down relative to shorter-term bonds. An inverted yield curve is typically interpreted as a potential indicator of economic slowdown or recession, as it reflects expectations of lower interest rates in the future to stimulate the economy.