The yield on the German benchmark 10-year Bund extended losses to fall below 2.3% at the start of January, as investors expect a sharp slowdown in the Eurozone inflation. Data from Germany and France showed inflationary pressure in Europe’s largest economies cooled more than anticipated in December, ramping up hopes of less aggressive rate hikes by the European Central Bank. Still, concerns over a global economic recession mounted amid rising borrowing costs and stubbornly high inflation. Also, expectations of increasing government funding and falling excess liquidity will likely continue to support yields amid increased public spending to fight the adverse impact of the energy crisis. In December, the European Central Bank pledged further rate hikes to fight inflation and announced it would start reducing its €5 trillion bond holdings from March.