Bund yields edge lower as French spread widens with energy prices in focus
TLT•Germany’s 10-year Bund yield fell 2 basis points to 3.47%, while the French-German yield spread widened 3 basis points to 141.50. Energy prices were mixed as investors assessed geopolitical developments and upcoming U.S. economic data.
1. European bond yields
Germany’s 10-year government bond yield, the euro area benchmark, fell 2 basis points to 3.47% on Monday. The two-year yield declined 0.5 basis points to 3.09%, while money markets priced the European Central Bank deposit rate at 2.72% by December, up from 2.50% currently, and 3.20% by late 2027.
2. French spread widens
The yield gap between French and German government bonds widened 3 basis points to 141.50 basis points. It reached 158.67 in early October, its highest level since November 2011. The Italian spread stood at 109 basis points after reaching 129.74 earlier this month. Investors will turn to U.S. economic data due Tuesday; a Commerzbank strategist said a strong report could add conviction to a December Federal Reserve rate hike and renew pressure on shorter-term yields.
