Interest rate environment
Yield on ten-year German Federal bonds / % | 2023 | 2022 | Change (percentage points) |
Average yield | 2.46 | 1.19 | +1.27 |
Highest yield | 3.02 | 2.57 | +0.45 |
Lowest yield | 1.90 | –0.19 | +2.09 |
Year-end yield | 2.03 | 2.56 | –0.53 |
Source: Thomson Reuters (daily closing prices)
In 2023, the interest rate environment was characterized by inflation that was slowing although still relatively high, in a weak economy. Developments were also influenced by the comparatively high financing requirements of countries, some of which were caused by the war in Ukraine, and the end of the central banks’ government bond purchase program. As a result, yields on government bonds showed high volatility in a limited range. Money market interest rates increased steadily in the first three quarters of 2023 and remained at their highest levels in the fourth quarter of 2023. EUR 3-month money market interest rates rose from 2.1% to almost 4%. This resulted in an inverse yield curve in the Eurozone.
