Main contracts: 2-year bond futures (TS) +0.02%, 5-year (TF) +0.09%, 10-year (T) +0.16%, 30-year (TL) +0.33%.

Commerzbank economist Joerg Kraemer said in a report that Germany’s debt problem is increasingly converging with France’s. He said Berlin has responded to energy-price shocks with public spending, including two fuel tax cuts that disproportionately benefited wealthier households and reduced incentives to save energy. Against a fragile governing coalition and policy divisions, Kraemer expects Germany’s budget deficit to widen to about 4% of GDP this year—near France’s 5%—and called for prioritizing public finances and raising competitiveness to support growth.

ECB Governing Council member Rehn said all euro-area member states need to control deficits.