Global Market: Eurozone bond yields fall as tech sell-off fuels safe-haven demand

Investors turn to government bonds as technology stock volatility and interest rate concerns weigh on global markets.

Germany's 10-year government bond yield, the benchmark for the euro zone, fell 6.5 basis points to 3.40%. The yield has traded in a range of around 3.40% to 3.50% since the beginning of October.

Technology stocks came under pressure globally, while credit markets showed signs of strain as investors reassessed crowded bets on data centres and other artificial intelligence infrastructure amid concerns about elevated interest rates, Reuters reported.

Germany's two-year government bond yield, which is more sensitive to expectations for monetary policy, declined 4 basis points to 3.06%.

Money markets priced in a European Central Bank deposit rate of 2.73% by December and 3.21% by late 2027, compared with the current rate of 2.50%, reflecting expectations of higher borrowing costs over the longer term.

Meanwhile, the yield spread between French government bonds, known as OATs, and German Bunds remained broadly unchanged at around 142 basis points. The spread had widened to 158.67 basis points in early October, its highest level since November 2011.

The spread between Italian and German 10-year government bond yields widened by 3 basis points to 111 basis points. It had reached 129.74 basis points earlier this month, marking its widest level since April 2025, Reuters reported.

Oil prices fell more than 1% as investors weighed potential supply risks against US efforts to reduce petroleum shipping costs by easing sanctions on vessels associated with the so-called shadow fleet.

The decline in bond yields came as investors sought protection from volatility in riskier assets, with developments in technology stocks, inflation and interest-rate expectations remaining key drivers of global financial markets.