German Bond Yields Disinvert Amid Soft Business Data

German 10-year bond yields rose above 2-year yields for the first time since November 2022, driven by weak business data that heightens expectations of further ECB rate cuts. Meanwhile, France’s 10-year yield nearly surpassed Spain’s for the first time in over a decade. Investor behavior indicates rising concerns over France’s economic stability.

Yields on Germany's 10-year bond outpaced those on its two-year debt on Monday, marking the first such disinversion since November 2022. This shift came as soft business activity data bolstered expectations of further rate cuts by the European Central Bank (ECB) within the year.

During the afternoon, U.S. economic data showed resilience compared to its European counterparts, leading to a rise in bond yields. The yield on Germany's two-year bond fell 7 basis points to 2.183%, while the 10-year yield decreased by 3 basis points to 2.188%.

French government bonds also garnered significant attention. France's 10-year yield was poised to surpass Spain's for the first time in over a decade. Concerns over French political stability were highlighted as new appointments were made, including 33-year-old Antoine Armand as the economy and finance minister. Investors remain cautious, reflecting broader apprehensions about France's long-term economic trajectory.

(With inputs from agencies.)