Germany's 2-year yield falls as France and Italy's rise
German two-year yields ease to 3.02% while French and Italian paper cheapens, extending a split that has run through the euro zone since mid-September.
Published
Germany's two-year bond yield is down 6 basis points at 3.02%. French and Italian two-year yields are each up 6 basis points, to 3.61% and 3.48%.
The move comes as France's 10-year yield rises 15 basis points to 4.8974%. That yield had retreated 16 basis points on October 6, after peaking near 4.989%, its highest level since 2002, earlier this month. The October 6 move also narrowed the spread over Germany's 10-year yield by 12 basis points.
On the German side, industrial output jumped 2% in August, far above forecasts, a day after factory orders for the same month were reported to have collapsed 10.6%. That decline in orders had already revived doubt over whether September's composite PMI reading of 53.8 marked a genuine turn in the economy.
The split between easing German yields and rising French and Italian ones looks like a continuation of the fiscal story that has run since mid-September, when French budget stress and Italy's debt warnings first pushed both countries' risk premiums past multi-year thresholds. Those premiums have only partially unwound since. Through that stretch, the widening in French and Italian spreads has not shown a consistent channel into Treasury yields or US equities, so today's 6 basis point split reads as another entry in an unresolved euro zone fiscal standoff rather than a signal reaching beyond it.