Euro zone bond yields slip for week as tech selloff drives safe-haven demand

what happened

Reuters reports that euro zone government bond yields are heading for a weekly decline as investors move into safer assets after a sharp selloff in US technology shares. The Nasdaq 100 lost more than 6% on Wednesday as investors dropped AI-related stocks, while worries about stricter AI rules after Democrats took control of Congress added pressure.

The 10-year German Bund yield touched 3.2075%, its lowest level since August 26, before steadying near 3.25%. German yields were on course for a drop of roughly 6 to 7 basis points over the week. Traders trimmed bets on ECB rate increases, with the chance of a hike next month priced at around 80% from a current rate of 2.5%. US payrolls data showing 165,000 jobs added in October barely moved euro zone yields.

why it matters

Demand for Bunds reflects their role as a haven during equity stress. If weakness in risk assets continues, German debt should stay supported, while peripheral bonds could face pressure after the recent tightening in French OAT spreads. Budget concerns ahead of France's presidential election next year keep the French-German spread in focus.

market impact

German Bunds and euro bonds: safe-haven demand supports prices and pushes yields lower

• ▲German Bunds pressure up — safe-haven buying during the US tech selloff lifts bond prices
• ▼Peripheral euro zone bonds pressure down — weaker risk appetite threatens to widen spreads against Bunds

tags

instruments