Spain's Sanchez calls snap election as French yields ease

Spanish Prime Minister Pedro Sanchez has called a snap election for November, after falling behind in polls. The gap investors demand to hold French 10-year bonds over German debt narrowed to 137 basis points on Monday, from 85 bps a month earlier. 12. Some market participants are betting the bond-market stress could prompt a dovish shift from the European Central Bank, which has already raised rates twice this year.

8%, and Europe is still bearing the brunt of the latest energy shock. Euro zone retail sales and construction PMIs are due later and could affect the debate. A year-end rate rise is now 83% priced. 3493%.

Bonds have been under pressure for weeks, and each bounce has drawn in new sellers. The sell-off would normally unsettle other asset classes, but markets elsewhere have so far stayed calm. 35% is now seen as the new pain threshold on the 10-year. The Nasdaq closed at a record, Nvidia's market capitalisation approached $7 trillion and Asian shares rose modestly.

4%. 5 billion) for the first time. Lower oil prices, with Brent near $100 a barrel, may also have helped. Exports from the Middle East have increased as ships run the Strait of Hormuz at night to move oil out.

It is risky work, but with VLCCs able to earn more than $1 million a day, the trade remains attractive. Key developments that could influence markets on Tuesday include euro zone retail sales for August, euro zone, Germany and France S&P Construction PMIs, and the UK S&P Global PMI. Fed officials John Williams, Michelle Bowman, Jeffrey Schmid and Lorie Logan are due to speak. 7000 won)