What is the probability that Christmas markets in Germany will be cancelled this December?
Your guess is as good as anyone else's on this Forum.
Oktoberfest was canceled. That might provide a clue. And since Christmas markets are common to many European countries it could vary a lot. Spain might be open and Italy closed. No one knows.
There are differing medical opinions as to whether the virus will return in the winter and if it does, the markets will be cancelled.
Check back in late September. The fall “flu/virus” season will control.
My guess would be they will be cancelled, people will have to be very careful in winter as not to create a second wave of infection
My guess is if the numbers remain constant, they will go forward. Time will tell.
I'm fairly certain that Octoberfest in Munich was cancelled due to the logistics required for this event. Just like most major trade shows or events, stuff has to be moving to the fairground months in advance to open on time. Likewise, it's impossible to reserve flights, hotels, bands, etc at the required times when every country is in lockdown the the pols are as indecisive as they usually are.
Note that there's no panic for most of the smaller, local, fests.
This is going to be a totally unique year to be a tourist in Europe. I doubt anyone who goes will ever find a less crowded opportunity.
This is an active discussion in Germany right now. There are stories about it in the papers from time to time, I have seen several in the last week. The consensus in German media is, that we do not know yet. There is supposed to be new decisions about large assemblies next week, which maybe will provide some clues, but it will all depend on the situation later in the year. So far, I have read that a few small markets have been canceled, but none are municipal (they are the type that are held at a specific Schloss or so).
If you are set on going to Christmas markets think out of the box and out of the Schengen area wher borders might be open. Cluj N., Lviv (excellent Christmas location), Kyiv ...
https://www.romania-insider.com/cluj-best-christmas-markets-europe