Eurozone yields rise as Nvidia encourages investors; long-term bonds wither

Euro zone bond yields rose on Thursday as investors used Nvidia’s positive results to return to risky assets such as stocks, ahead of delayed US jobs data that could set the tone for government bonds and the broader fixed income market in the coming weeks.Now that investors are feeling more positive about the resilience of the stock market and the AI ​​story that underlies it, bonds have come under pressure. This has occurred mainly at the longer end of the curve, where yields in Japan have reached record highs, while UK and US government bond yields have risen to their highest levels in more than six weeks.

Long-term interest rates on German government bonds were no exception; the 30-year national debt now stands at 3.34%, the highest level since late September. German 10-year Bund yields rose 1.3 basis points to 2.72% in early European trading, around the highest level since early October, and were set to rise for the fifth straight week.
The two-year Schatz yield held steady at 2.019% after falling about 2 basis points this week, in contrast to the 30-year yield’s 2.4 basis points rise, a dynamic known as “curve steepening.”

With nothing moving in the European data market on Thursday, investors’ attention was focused on the September US jobs report, which was delayed by the 43-day government shutdown. The U.S. economy is expected to add jobs at a moderate pace.

Although backward-looking, the numbers could help the Federal Reserve decide whether to continue cutting rates next month or take a pause. The European Central Bank, on the other hand, is expected to make no interest rate changes at all in the coming year, based on the swap market. Against this backdrop, the yield premium on US 10-year Treasuries versus 10-year Bunds is hovering around 141 bp, not far from September’s nearly two-year low of around 135 bp.

France and Spain are both entering the market with new debt. Spain will sell around 5.5 billion euros in longer-term bonds, while France will auction around 12 billion euros, spread over three- to six-year bonds and another 1 billion euros in long-term inflation-linked paper, according to analyst estimates.