Germany’s 10-year Bund yield inched up to 2.64% on Monday, staying near its lowest level since September 8, as investors closely watched political developments in France and ongoing US-China trade tensions. In France, Sébastien Lecornu—the nation’s fifth prime minister in two years—resigned last Monday only to be reappointed on Friday. He now faces a narrow path to political survival ahead of Monday’s draft budget bill deadline. To secure its passage through a fragmented parliament, Lecornu is seeking to persuade both the Socialists and center-right Republicans to either abstain or provide conditional support in the pivotal budget vote. Meanwhile, US President Trump adopted a more conciliatory stance toward China on Sunday, just two days after threatening 100% tariffs on Chinese imports in response to Beijing’s tightening of export controls on rare earth materials. On the monetary policy front, markets priced in about a 55% chance of a 25 bps ECB rate cut by July 2026.
