Bund Yields Edge Higher
Germany's 10-year Bund yield edged higher to 3.26% as investors refocused on growing expectations of December rate hikes by the Federal Reserve and the ECB, outweighing the downward pressure from falling oil prices after US President Donald Trump played down the prospect of further strikes on Iran. Bond markets initially rallied last week after the Democrats' sweep in the US midterm elections raised expectations of political gridlock and more limited fiscal spending. However, yields reversed course on Friday following stronger-than-expected October US employment data, pushing the implied probability of a December Fed rate hike to 81%. Expectations of an ECB move are more subdued at 66%, reflecting the Eurozone's weaker growth outlook. European bonds also remain vulnerable to France's ongoing political and fiscal uncertainties, as well as uncertainty surrounding the ECB leadership transition following President Christine Lagarde's announcement that she intends to step down early.
Germany's 10-year Bund yield edged higher to 3.26% as investors refocused on growing expectations of December rate hikes by the Federal Reserve and the ECB, outweighing the downward pressure from falling oil prices after US President Donald Trump played down the prospect of further strikes on Iran. Bond markets initially rallied last week after the Democrats' sweep in the US midterm elections raised expectations of political gridlock and more limited fiscal spending. However, yields reversed course on Friday following stronger-than-expected October US employment data, pushing the implied probability of a December Fed rate hike to 81%.
Expectations of an ECB move are more subdued at 66%, reflecting the Eurozone's weaker growth outlook. European bonds also remain vulnerable to France's ongoing political and fiscal uncertainties, as well as uncertainty surrounding the ECB leadership transition following President Christine Lagarde's announcement that she intends to step down early.