The German 10-year Bund yield fell 8 basis points to 3.38%, its lowest level in five weeks, mirroring the decline in US Treasury yields. The move reflected a global flight to safety after an equity sell-off triggered by concerns around the AI sector, as well as worries over elevated borrowing costs, persistent inflationary pressures, high interest rates, and higher oil prices.
At the same time, ECB President Christine Lagarde noted that energy-driven inflation had not yet broadened significantly across the euro-area economy, supporting a cautious, wait-and-see stance on monetary policy. In contrast, ECB policymaker Gediminas Šimkus warned that further interest rate hikes might still be needed as price pressures continue to build, and indicated that an increase as early as this month remained on the table. Ongoing upside inflation surprises and tensions related to the US-Iran conflict have further bolstered market expectations for an additional ECB rate hike in December.
