Bund yields rise as caution prevails before US midterms
TLT•German 10-year Bund yields rose 3 basis points to 3.32% after touching a two-month low, while French 10-year yields rose 3 basis points to 4.928%. The France-Germany 10-year yield spread stood at 161 basis points as investors awaited US midterm election results.
1. Yields reverse from lows
Euro zone benchmark Bund yields rose on Tuesday after briefly touching two-month lows earlier in the day, when oil prices fell sharply. German 10-year yields were up 3 basis points at 3.32%, while German two-year yields rose 1 basis point to 3.024%.
2. Election caution
Analysts expected Bunds to remain supported by the prospect of Democratic victories in the US, which could weigh on Wall Street and broader risk appetite. Polls and independent analysts suggested Democrats were on course to regain control of the House, while the Senate contest remained finely balanced. Commerzbank’s Christoph Rieger said a Democratic sweep could reinforce political headwinds for AI investment and that Democratic control of Congress would be Treasury-positive.
3. French yields and spreads
French 10-year yields rose 3 basis points to 4.928%, and the France-Germany 10-year spread stood at 161 basis points. The spread reached 177.72 basis points on October 22, its highest level since November 2011. French borrowing costs had retreated from last month’s 24-year high above 5%, which came as protests raised concern about political deadlock and fragile public finances.
