The yield on Germany’s 10-year Bund fell to 3.47%, pulling back from last week’s 17-year highs as Brent crude prices eased toward $100 a barrel amid tentative signs of an improving geopolitical backdrop. Recent remarks by US President Trump suggesting progress in trade talks with China and a possible diplomatic opening with Iran have tempered fears of an imminent supply shock. At the same time, stronger regional crude supply has helped relieve pressure in physical oil markets.
Domestically, Germany’s ruling CDU suffered a disastrous state election result that has intensified doubts over Chancellor Friedrich Merz’s political future. The party recorded its worst-ever performance in a state election, failed to secure a single seat, and is now facing internal calls for Merz to resign after just 16 months in office.
Elsewhere in Europe, France’s public finances are coming under increased scrutiny. Scope Ratings has downgraded the country’s credit rating, while Morningstar DBRS has revised its outlook on France to negative ahead of next year’s presidential election.
