Bund Yield Falls to Lowest Level Since August
Germany’s 10-year Bund yield fell below 3.25%, reaching its lowest level since late August, as investors rotated out of technology stocks following the Democratic sweep in the US midterm elections and sought safer assets such as government bonds. Global bond yields also declined, tracking lower US Treasury yields, as the Democratic takeover of the House was seen as reducing the likelihood of further deficit-expanding legislation under the Trump administration and easing concerns over US government borrowing. However, rising eurozone inflation and increasingly hawkish rhetoric from ECB policymakers continued to reinforce expectations of tighter monetary policy. Annual eurozone inflation climbed to a fresh three-year high of 4.0% in October, largely driven by surging energy prices. Despite leaving interest rates unchanged last week, ECB officials signaled that further hikes may be necessary to contain inflationary pressures and prevent them from feeding through into wages.
Germany’s 10-year Bund yield fell below 3.25%, reaching its lowest level since late August, as investors rotated out of technology stocks following the Democratic sweep in the US midterm elections and sought safer assets such as government bonds. Global bond yields also declined, tracking lower US Treasury yields, as the Democratic takeover of the House was seen as reducing the likelihood of further deficit-expanding legislation under the Trump administration and easing concerns over US government borrowing. However, rising eurozone inflation and increasingly hawkish rhetoric from ECB policymakers continued to reinforce expectations of tighter monetary policy.
Annual eurozone inflation climbed to a fresh three-year high of 4.0% in October, largely driven by surging energy prices. Despite leaving interest rates unchanged last week, ECB officials signaled that further hikes may be necessary to contain inflationary pressures and prevent them from feeding through into wages.