Bund Yields Edge Lower as Oil Prices Retreat
Germany’s 10-year Bund yield edged down to 3.23% as falling oil prices eased inflationary concerns, prompting traders to scale back expectations for further central bank rate hikes. Brent crude slipped below $95 a barrel after US President Donald Trump downplayed the likelihood of further strikes on Iran, although attacks on vessels near the Strait of Hormuz kept supply concerns in focus. The move follows a bond rally last week after the Democrats’ sweeping victory in the US midterm elections raised expectations of political gridlock and more limited fiscal spending. Markets currently price in a 66% chance of a rate hike in December, with another increase by February fully priced in, according to data. European bonds also remain vulnerable to France’s political and fiscal uncertainties and questions surrounding the ECB leadership transition following Christine Lagarde’s announcement that she intends to step down early.
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Germany’s 10-year Bund yield edged down to 3.23% as falling oil prices eased inflationary concerns, prompting traders to scale back expectations for further central bank rate hikes. Brent crude slipped below $95 a barrel after US President Donald Trump downplayed the likelihood of further strikes on Iran, although attacks on vessels near the Strait of Hormuz kept supply concerns in focus. The move follows a bond rally last week after the Democrats’ sweeping victory in the US midterm elections raised expectations of political gridlock and more limited fiscal spending.
Markets currently price in a 66% chance of a rate hike in December, with another increase by February fully priced in, according to data. European bonds also remain vulnerable to France’s political and fiscal uncertainties and questions surrounding the ECB leadership transition following Christine Lagarde’s announcement that she intends to step down early.