Archive · 2 Oct 2026
France Fiscal Woes Drive Haven Demand for US Treasuries
Investors became worried about France’s finances and political situation.
They also saw bond markets in Europe become more risky.
When investors feel nervous, they often buy US Treasury bonds because they are viewed as safer.
This buying pushed US Treasury yields lower.
Yields on short-term Treasuries also fell after a weaker US manufacturing report.
That report suggested parts of the US economy may be cooling.
The bond market has recently been hurt by higher oil prices, government borrowing and other forces.
Investors are now waiting for a US jobs report to help them understand what the Federal Reserve might do next.
US Treasury yields fell as turmoil in France and European bond markets increased demand for safer assets.
The two-year Treasury yield dropped as much as 13 basis points to 4.75%, its largest projected decline since August 2025.
The global bond selloff has been fueled by the oil-price shock from the US-Iran war, government borrowing and resilient economic growth.
The spread between Italian and German two-year yields nearly doubled to 55 basis points, while France’s spread rose as much as 22 basis points.
Investors will examine Friday’s US payroll report for signals about economic strength and the Federal Reserve’s next interest-rate move.
- Who
- Investors, the US Treasury Department, the Federal Reserve and policymakers in Europe are involved.
- What
- US Treasury bonds rebounded as European fiscal and political concerns increased demand for haven assets.
- When
- The move accelerated on Thursday, with investors looking ahead to Friday’s payroll report.
- Where
- The market reaction affected the United States, France, Italy, Germany and the United Kingdom.
- Why
- Investors sought safety amid France’s fiscal problems, rising European bond-market risk and uncertainty over global interest rates.
Haven Demand and Valuation Support
Risk of Further Bond Losses
Near-term Treasury outlook
Haven Demand and Valuation Support
European financial and political stress could continue driving investors toward US Treasuries as a haven.
Risk of Further Bond Losses
Bloomberg strategist Simon White said Treasuries may still fall further on historical measures before becoming oversold and ready for a lasting rebound.
Reason for lower US yields
Haven Demand and Valuation Support
The decline reflected overseas turmoil and a weaker-than-expected US manufacturing report, which reduced expectations for aggressive Federal Reserve rate increases.
Risk of Further Bond Losses
The broader selloff remains supported by inflationary and supply pressures from higher oil prices, heavy government borrowing, resilient growth and new debt linked to artificial-intelligence investment.
- Two-year Treasury yield
- Fell as much as 13 basis points to 4.75%.
- Italian-German yield spread
- Nearly doubled to 55 basis points, its largest daily closing increase since 2020.
- French yield spread
- Rose as much as 22 basis points, the biggest increase since 2012.
- UK 30-year yield
- Reached 6% for the first time since 1998.
- US Treasury buyback
- The Treasury Department repurchased $6 billion of debt maturing in 10 to 20 years.
- Expected September payroll growth
- Economists surveyed by Bloomberg forecast approximately 88,000 new jobs.
- Federal Reserve rate expectations
- Traders priced in about a one-in-four chance of an interest-rate increase this month.