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French-German bond spread hits highest since 2011 amid market pressure
The widening comes as September US jobs and euro area inflation prints shift rate expectations, with the October rate hike probability cut to below 20%.
European bond markets are under pressure as the French government yield spread versus Germany widened to its highest level since 2011, according to Action Forex.
Action Forex also points to upcoming and recent data, including the US September jobs report and euro area inflation releases, as drivers of shifting expectations.
In the US, nonfarm payrolls rose by 29k in September, below the 90k consensus, while the unemployment rate increased to 4.2% and average hourly earnings grew 0.1% m/m versus 0.3% expected, Action Forex reports.
In the euro area, September headline inflation increased to 3.8% y/y and core inflation rose to 2.5% y/y, with the upside surprise in HICP driven mainly by energy and food inflation, while markets have cut the probability of an October rate hike to below 20%, Action Forex adds.