Bond yields eased in most major markets last week, but France was the glaring exception. In stocks, the global AI selloff kept hitting the equities markets that had gained the most this year, putting the US back ahead of the All Country World ex-US ytd. That supports our downgrade last week of Go Global to market weight, though the fundamental case for overseas stocks remains strong. Here’s more:
I. Global Bonds
Yields fell in five of the eight major bond markets we track (chart). The US 10-year Treasury yield fell to 5.00%. France’s yield jumped 24bps to 5.02%, slightly surpassing the US’s. Yields also fell in the UK, Australia, Germany, and Japan.
The spread between French and German 10-year yields widened 31bps last week to 167.9bps (chart). Last week, we wrote that contagion from France had eased for now. It’s back. Italy’s spread widened to 123.9bps from 106.6bps. Greece’s widened to 105.0bps from 90.8bps. Italy’s 10-year bond now yields 44bps less than France’s.
II. Global Stocks