French 10-year yield touches six-week low as euro zone yields mirror oil prices
TLT•France's 10-year bond yield fell to 4.69%, its lowest since late September, before ending down 2 basis points at 4.74% as oil prices rebounded. The gap between French and German debt narrowed to 148 basis points from highs above 170 in October.
1. French yields fall
France's 10-year bond yield dropped to a six-week low of 4.69% in afternoon trading, when Brent crude was down more than 5%. It later stood at 4.74%, down 2 basis points, as oil pared its decline to 3.3%.
2. Oil and bond markets
Energy prices have been a major driver of government bonds this year. Falling energy prices sent yields lower globally last week, while jitters in equity markets also pushed investors toward government bonds. Goldman Sachs analysts said energy had reasserted itself as the primary driver of European rates.
3. Yields and rate outlook
Germany's 10-year yield was last up slightly at 3.26%, and the French-German yield gap was 148 basis points, down from highs above 170 in October. Market pricing reflected about a 66% chance of an ECB rate increase in December, with a February hike fully priced in.
