U.S., Eurozone Bond Yields Rise Ahead of Inflation, Rates Outlook — 2nd Update

By Emese Bartha and Paulo Trevisani

U.S. and eurozone government bond yields turned higher on Monday, reversing earlier declines as investors pivoted back to economic fundamentals and the likelihood of December interest-rate hikes by the Federal Reserve and the European Central Bank.

The 10-year Treasury yield rose to 4.872% from Friday's settlement of 4.858%, while Germany's 10-year Bund yield increased 0.014 percentage point to 3.267%, according to Tradeweb.

The increase comes as markets brace for U.S. inflation numbers to be released Tuesday. The October consumer price index is expected to remain above the Federal Reserve's 2% target, keeping the central bank on track to raise interest rates next month.

The inflation outlook, however, has eased as President Trump faces increasing calls to end the war in Iran. Brent crude fell 5% to $93. The dollar, meanwhile, weakened amid mounting worries about AI, with the WSJ Dollar Index down 0.3%.

"Our view remains that the U.S. economy should continue to hold into 2027," said Jefferies global economist Mohit Kumar in a note, noting that any sharp pullback in artificial-intelligence investment or negative wealth effects could pose downside risks.

"But...we see some hiccups rather than a derailing of the AI trade."

Appetite for sovereign debt was also dampened by emerging diplomatic momentum in the Middle East.

"Safe-haven demand has also eased amid diplomatic efforts in the Middle East," noted Mahmoud Mashal, senior market analyst at VT Markets Dubai. "No agreement has been signed yet, and markets remain exposed to renewed escalation."

Market attention now turns to Tuesday's release of the October consumer price index. Analysts expect the release to omit annual figures because a year ago CPI data was incomplete due to a government shutdown.

Looking at the fourth quarter, TD Securities strategists anticipate an uptick in underlying price pressures. "We expect the core segment to end 2026 at 2.8% year-on-year after bottoming at 2.4%," they noted.

"Headline will likely move gradually higher as well to end 2026 at 4.0% after peaking in May at 4.2%, but its evolution will remain entirely dependent on the resolution of the Middle East conflict."

TD Securities expects the broader disinflation trend to regain traction by mid-2027.

Write to Emese Bartha at emese.bartha@wsj.com and to Paulo Trevisani at paulo.trevisani@wsj

(END) Dow Jones Newswires

November 09, 2026 14:36 ET (19:36 GMT)