Bund Yields Retreat as Oil Prices Ease
Germany’s 10-year Bund yield eased to 3.45%, moving further away from a 17-year high touched in late September, supported by falling oil prices and safe-haven demand. Brent crude retreated from recent highs as concerns over Middle Eastern oil supplies eased after US President Donald Trump said Washington would not launch an attack on Iran before the November midterm congressional elections, citing productive talks aimed at ending the conflict. Markets also scaled back expectations for ECB tightening, with the deposit rate now priced to rise from 2.50% currently to 2.72% by December and 3.20% by late 2027. Before the recent widening in bond spreads, investors had anticipated roughly one additional rate hike in early 2027. Meanwhile, borrowing costs and risk premiums on French and Italian government debt declined after rising sharply last week, as investors reassessed fiscal and political risks across the euro area.
45%, moving further away from a 17-year high touched in late September, supported by falling oil prices and safe-haven demand. Brent crude retreated from recent highs as concerns over Middle Eastern oil supplies eased after US President Donald Trump said Washington would not launch an attack on Iran before the November midterm congressional elections, citing productive talks aimed at ending the conflict. 20% by late 2027. Before the recent widening in bond spreads, investors had anticipated roughly one additional rate hike in early 2027.
Meanwhile, borrowing costs and risk premiums on French and Italian government debt declined after rising sharply last week, as investors reassessed fiscal and political risks across the euro area.