FX.co ★ Bund Yields Hold Steady as Markets Assess Inflation Data

Germany’s 10-year Bund yield was little changed, holding just above 3.3%, as investors weighed accelerating eurozone inflation against support for global bond markets from gains in US Treasuries after the unexpected Democratic sweep in the US midterm elections. Eurozone annual inflation accelerated to 4.0% in October, its highest level since September 2023 and well above the ECB’s 2% target, driven largely by a sharp rise in energy prices. At the same time, increasingly hawkish comments from European Central Bank policymakers reinforced expectations of tighter monetary policy ahead. Although the ECB left interest rates unchanged last week, officials indicated that further rate hikes may be required to contain inflation and prevent price pressures from feeding into wages. In the US, Treasury yields fell as the Democratic takeover of the House is seen as reducing the likelihood of additional deficit-expanding legislation under the Trump administration, easing concerns over future government borrowing.