Business · Markets · 1 hr ago
German bond yields and French, Italian risk premiums fall
On Monday, German government bond yields fell slightly, as did the extra returns investors demand to hold French and Italian debt rather than German debt.
US President Donald Trump said Russia and Ukraine had agreed to a limited ceasefire covering energy infrastructure.
Energy prices fell after his announcement.
Investors are also betting that tensions in the Middle East will be contained, reducing the risk of a sharp rise in energy prices.
Germany's 10-year bond yield, a key eurozone benchmark, fell to 3.46 percent.
The narrower French and Italian premiums suggest investors saw less added risk in holding those countries' debt compared with German bonds.
Markets still expect the European Central Bank's deposit rate to rise from 2.50 percent now to 2.73 percent by December, and to 3.22 percent by late 2027.
German benchmark bond yields edged lower on Monday as French and Italian debt risk premiums also fell.
The moves followed lower energy prices after US President Donald Trump announced a limited Russia-Ukraine ceasefire covering energy.
The German 10-year yield fell 2.5 basis points to 3.46%.
The spread between French and German bond yields narrowed by one basis point to 136.50 basis points.
The Italian-German spread stood at 109 basis points, down from 129.74 basis points earlier in October.
- Who
- Investors traded German, French and Italian government debt.
- What
- German bond yields and French and Italian risk premiums fell.
- When
- Monday; Trump announced the ceasefire on Sunday.
- Where
- Eurozone bond markets, including Germany, France and Italy.
- Why
- Energy prices fell after the ceasefire announcement, while investors increasingly bet that Middle East tensions would be contained.
This story does not have two clearly opposing sides.
No direct quotes in the coverage so far.
Trump said Russia and Ukraine had agreed to a ceasefire relating to the energy sector.
German bond yields and French and Italian debt risk premiums fell as energy prices declined.
The French-German bond spread reached 158.67 basis points, its highest level since November 2011.
- German 10-year yield
- Fell 2.5 basis points to 3.46%
- German 2-year yield
- Fell 2 basis points to 3.07%
- French-German spread
- Narrowed 1 basis point to 136.50 basis points
- Italian-German spread
- 109 basis points, compared with 129.74 basis points earlier in October
- ECB deposit rate expectations
- Markets priced in 2.73% by December, compared with the current 2.50% rate
Sources
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