Eurozone bond yields set for biggest weekly fall since September as investors seek safety

Eurozone government bond yields were headed for their biggest weekly decline since late September as investors sought safe-haven assets amid a renewed global technology selloff and reduced expectations of European Central Bank (ECB) interest rate hikes.

Germany's 10-year government bond yield, the euro zone benchmark, fell 2 basis points to 3.22% on Friday, its lowest level since August 26. It was on track for a weekly decline of 9.5 basis points.

Global technology stocks extended their losses on Friday as concerns that Democrats' midterm victory could lead to tighter artificial intelligence regulations and slow the sector's expansion unsettled investors.


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Meanwhile, oil prices were headed for a sharp weekly decline as markets anticipated a possible de-escalation of the Iran conflict following significant election losses for US President Donald Trump's party. However, lingering concerns over supply disruptions continued to support prices.

Investors also scaled back expectations of further ECB monetary tightening. Euro short-term rate forward contracts indicated that markets were pricing in a deposit rate of 3.02% by late 2027, down from 3.25% at the end of October.

Markets had previously priced in nearly an 80% probability of an ECB rate hike next month, compared with the current deposit rate of 2.50%.

Read more: Japan's Nikkei slumps more than 5% as market rout deepens on AI worries

Elsewhere, the yield spread between French government bonds (OATs) and German Bunds remained broadly unchanged at around 154.50 basis points. The spread had recently widened to 177.70 basis points, its highest level since November 2011, reflecting concerns over France's fiscal and political outlook.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)