FX.co ★ Bund Yields Ease on Safe-Haven Demand

Germany’s 10-year Bund yield slipped below 3.45%, its lowest level since September 9, following a decline in US Treasury yields as a global equity selloff pushed investors into safe-haven government bonds. Caution around the AI trade—one of this year’s strongest market themes—is rising ahead of the upcoming earnings season. Mounting competition, stretched valuations and concerns over soaring AI-related capital expenditure are fueling doubts about whether corporate profits can sustain the sector’s rapid rally.

Despite the recent pullback, European sovereign yields remain close to multi-year highs, underpinned by persistent, energy-driven inflation pressures, resilient economic activity and worries about France’s public finances in the run-up to next year’s presidential election. Market participants are now focused on Wednesday’s US CPI release and commentary from ECB officials at this week’s IMF–World Bank meetings for further guidance on the path of monetary policy.