The CDU/CSU–SPD grand coalition under Chancellor Friedrich Merz, formed after the 2025 election, faces ongoing strains from state election setbacks, low personal approval ratings for Merz, and disputes over pension, tax, care, and labor reforms. Recent mediation by Bundespräsident Frank-Walter Steinmeier helped avert escalation on issues such as Pflegereform and a proposed sugar tax, while both parties have publicly reaffirmed commitment to the coalition treaty to maintain stability amid rising AfD support. Traders assign an 87.5% probability that the arrangement holds through 2026, reflecting shared incentives to avoid a snap election, the thin Bundestag majority, and the political costs of another government collapse so soon after the prior traffic-light coalition ended. Scheduled state votes and the 2027 budget process remain potential pressure points, but no formal withdrawal signals have emerged.