European Bond Yields Ease but Risks Persist
European government bond yields edged lower after Monday’s sharp rise, though borrowing costs in heavily indebted euro-area countries remained near multi-year highs amid social unrest and fiscal concerns. Germany’s 10-year Bund yield held at 3.44%, supported by safe-haven demand, while France’s eased to 4.9% and Italy’s stood at 4.57%. The 10-year OAT-Bund spread remained around 147 basis points, its widest level since the eurozone sovereign debt crisis. In France, curfews were imposed in several cities amid anti-government protests, potentially complicating austerity efforts ahead of the 2027 elections. Italy also announced plans to deploy 500 troops following days of unrest. Meanwhile, geopolitical tensions intensified after Ukrainian President Volodymyr Zelenskyy accused US President Donald Trump of pressuring Kyiv to make concessions to Russia, while persistent inflation concerns and expectations of higher-for-longer interest rates continued to weigh on sentiment.
European government bond yields edged lower after Monday’s sharp rise, though borrowing costs in heavily indebted euro-area countries remained near multi-year highs amid social unrest and fiscal concerns. Germany’s 10-year Bund yield held at 3.44%, supported by safe-haven demand, while France’s eased to 4.9% and Italy’s stood at 4.57%. The 10-year OAT-Bund spread remained around 147 basis points, its widest level since the eurozone sovereign debt crisis. In France, curfews were imposed in several cities amid anti-government protests, potentially complicating austerity efforts ahead of the 2027 elections.
Italy also announced plans to deploy 500 troops following days of unrest. Meanwhile, geopolitical tensions intensified after Ukrainian President Volodymyr Zelenskyy accused US President Donald Trump of pressuring Kyiv to make concessions to Russia, while persistent inflation concerns and expectations of higher-for-longer interest rates continued to weigh on sentiment.