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2025-10-30 21:49:08
[European Debt "Frozen" at High Levels: ECB Holds Steady, US Treasury Yields "Ignite" the Momentum] ⑴ After the European Central Bank (ECB) kept interest rates unchanged on Thursday, the yield on 10-year German bonds rose only slightly by 3.8 basis points to 2.657%, still at a monthly high. The spread between the same maturity in Italian bonds widened to 148 basis points, indicating that the market had already priced in the "hold-up" expectation. ⑵ Institutional data shows that European debt was driven up by US bonds. The yield on 10-year US Treasury bonds jumped 10 basis points on Wednesday, and the US-German interest rate spread widened to 145 basis points, the widest since 2007. Carry trade inflows pushed up the US dollar while suppressing European bond prices. ⑶ Mark Wall of Deutsche Bank pointed out that despite US tariff rhetoric and multiple uncertainties, the Eurozone's third-quarter GDP still recorded 0.2% quarter-on-quarter growth. The "resilience" of the economy made it difficult for dovish committee members to win a majority, and the implied probability of a December rate cut in the swap market fell from 55% last week to 36%. (4) Technically, German bond futures have closed below 138.50 for three consecutive days, and the RSI has entered the oversold zone of 30. If the preliminary core CPI reading on Friday is higher than 2.5%, the yield may test the 2.75% level. Short positions have increased to an eight-week high. (5) Fund flows show that European bond ETFs saw a net outflow of 1.2 billion euros this week, the largest since May. Investors are shifting to short-term notes as a safe haven, and the 2s10s yield curve has steepened by 5 basis points. The market is awaiting whether Lagarde's press conference at 22:45 Beijing time will release dovish signals.
