Bonds: A Slight Ease

After the sell-off in government bonds, things have calmed down somewhat. Nevertheless, yields remain high—and concerns about France persist. Bonds issued by small and medium-sized enterprises are having a hard time.October 9, 2026. FRANKFURT (Deutsche Börse). There’s been a lot of excitement in the bond markets. “This week was quite eventful, with the top topics being oil prices, inflation, and France,” reports Arthur Brunner, who trades bonds for ICF Bank. Recently, however, things have calmed down somewhat. Yields have not risen further. One reason: U.S. President Trump’s announcement that he would not attack Iran before the U.S. midterm elections. This caused oil prices to fall, thereby easing concerns about inflation and interest rate hikes. “In addition, prices on the U.S. bond market rose following a well-received auction of 30-year Treasury bonds,” explains Brunner.The yield on 10-year German government bonds stood at 3.47 percent on Friday morning, slightly below last Friday’s 3.48 percent and well below the 3.65 percent reached last week. However, this is still the highest level since 2008. Yields in the U.S. also stopped rising. The yield on 10-year U.S. Treasury bonds currently stands at 5.24 percent.“French Government Bonds Now Only Available at Substantial Risk Premiums”As far as France is concerned, the situation has at least not worsened further. The yield spreads on 10-year French government bonds relative to comparable German government bonds have now fallen slightly from 150 basis points last Friday. However, the spreads are still as high as they were during the European debt crisis. The government under Emmanuel Macron is currently trying, without a majority of its own, to pass the final budget before next year’s elections. At the same time, ongoing student protests are rocking the country.“Investors are viewing the eurozone’s second-largest economy with increasing suspicion. They are now only willing to buy French government bonds at substantial risk premiums,” notes Cyrus de la Rubia of Hamburg Commercial Bank. He remains skeptical: “Given the upcoming presidential elections, we can no longer rule out the possibility that investors will at some point refuse to lend money to the French government altogether.”Entry at a Low LevelSome investors are taking advantage of the still-low prices of French government bonds to enter the market. Gregor Daniel of Walter Ludwig Wertpapierhandelsbank reports purchases of bonds maturing in 2038 with a current yield of 4.91 percent ( ), “But these are small quantities.” Brunner reports purchases of Australian government bonds denominated in Australian dollars. For example: the bond maturing in 2039 with a current yield of 5.52 percent ( ).Gregor DanielCorporate Bonds Over Government BondsMany corporate bonds from France are now more popular than the country’s government bonds. “Corporate bonds totaling nearly 215 billion euros are now being traded as if they were safer than French government securities,” reports the Bloomberg news agency. This represents an increase of nearly 18-fold since the beginning of 2026.Buying Activity in RWE and FraportIn the corporate bond market, Daniel is seeing a lot of buying activity in RWE bonds maturing in 2032 with a current yield of 4.18 percent ( ) as well as Fraport bonds maturing in 2032 with a current yield of 4.1 percent ( ). “Overall, trading volume is strong; investors are buying just about everything,” he reports.However, Brunner currently sees caution regarding small and medium-sized issuers. “There’s a tendency toward selling.” Some have even suffered significant losses, such as The Platform Group ( ). The share price is now down to just 32 percent. According to Brunner, ABO Energy ( ) fell further. The renewable energy project developer must undergo a fundamental restructuring; a standstill agreement with its financing partners remains in effect until the end of November. The share price currently stands at 10.5 percent.According to Daniel, profit-taking also occurred following the presidential elections in Brazil. “Bonds denominated in the Brazilian real were sold off across the board.” By Anna-Maria Borse, October 9, 2026, © Deutsche Börse AG About the Author Anna-Maria Borse is a finance and business editor specializing in financial markets, the stock market, and economic issues.Feedback and questions to live@deutsche-boerse.com

Bonds: A Slight Ease

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