A planned summit between US President Donald Trump and Russian President Vladimir Putin was suspended the day before after Moscow rejected a proposed immediate ceasefire in Ukraine. Meanwhile, US officials in the Middle East increased pressure on Hamas to disarm in support of a fragile ceasefire in Gaza.
The yield on German ten-year Bunds remained at 2.553%, while that on the two-year Schatz remained unchanged at 1.915%.
A massive sell-off in gold overnight, with prices falling the most in one day since 2020, caused some volatility in broader markets but did little to dent other safe havens such as bonds.
French bonds held steady around 3.35%, roughly where they traded last week, since Prime Minister Sebastien Lecornu’s newly formed government appeared to have reached a compromise with left-wing lawmakers over his budget plans, averting another shake-up.
On Friday, Moody’s will assess France’s creditworthiness. S&P Global made a surprise downgrade last week, warning that political instability is hampering the French government’s ability to get its finances under control. Fitch did the same last month. The European Central Bank meets next week and is not expected to make any changes to monetary policy. Carsten Brzeski, ING’s global macro head, said that since the central bank’s meeting in September, data releases had been “sparse and inconclusive” and that there were no external factors that could prompt policymakers to cut rates, or signal that a cut was imminent. “The most common comments simply repeat the now familiar feeling that the ECB is in a ‘good place’, with little urgency to adjust rates,” he said.
He added that while October seemed like a done deal in terms of unchanged behavior, traders were underestimating the chances of a cut at the December meeting. The markets reflect virtually no chance of any change in borrowing costs in December and very little realistic possibility of any kind of movement until March next year.
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