After the Federal Reserve decision, U.S. and European bond yields declined, with markets focusing on the European Central Bank meeting.

智通财经2026/10/29 10:08

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After the Federal Reserve kept rates unchanged, US Treasury and European government bond yields fell during early European trading, with market focus shifting to the European Central Bank meeting.
According to Tradeweb data, the 2-year US Treasury yield fell by 6.3 basis points to 4.670%, and the 10-year yield declined by 5.4 basis points to 4.990%.
The 10-year German government bond yield fell by 3.3 basis points to 3.351%, the 10-year French government bond yield dropped by 3.2 basis points to 4.908%, and the UK gilt yield declined by 4.9 basis points to 5.298%, with focus moving from Wednesday’s budget to next week’s Bank of England decision.
Commerzbank interest rate strategist Lim said that bonds received stronger support after the Fed decision.
The Federal Reserve kept the federal funds rate at 3.75% to 4.00%, with Cook and Hamarik voting for a 25-basis-point hike, but Chairman Walsh stated that since last month's rate hike, financial and credit conditions have tightened.
Tanner, Head of Fixed Income at Aptus Capital Advisors, noted that the market has already accomplished part of the Fed’s work by imposing higher rates and tighter credit conditions, particularly in some of the more overinflated areas of AI capital expenditure.
Walsh also stated that, although overall financial conditions are tighter, he is unwilling and unable to call it “tightening.” Institutional data shows the US money market is pricing in an 80% probability of a rate hike in December.
Following Walsh’s press conference, bond yields diverged, with the 2-year falling and the 10-year rising.
Thornburg Investment Management portfolio manager Hassan remarked that Walsh’s refusal to offer forward guidance could be counterproductive, as the market-driven constraints he relies on are being eased by the front-end rally.
Doyle, Chief Economist at Macquarie Group, stated that his baseline forecast is for the Fed to raise rates another total of 50 basis points, most likely 25 basis points each in December and next March.
In the eurozone, the European Central Bank is expected to keep rates unchanged, with the deposit rate remaining at 2.50%. Recently, the surge in French government bond yields due to budget concerns may worry decision-makers, and money markets are pricing in a 65% chance of a rate hike in December.
Commerzbank’s Lim said that, given the latest developments in French government bonds, a rate hike is nearly off the table. The yield spread between French and German government bonds has widened to its largest since the end of 2011.
Investors will watch for potential remarks from European Central Bank President Lagarde regarding the recent sharp widening of the 10-year yield spread between French and German government bonds. Walburg, Senior Economist at Generali Investments, expects Lagarde will firmly push back against speculation that the ECB might use its Transmission Protection Instrument to intervene in bond markets, while still leaving the possibility of a December rate hike open.
Tozer, a member of the Carmignac Investment Committee, stated that the ECB's issue is no longer just inflation, but inflation plus widening yield spreads.

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After the Federal Reserve decision, U.S. and European bond yields declined, with markets focusing on the European Central Bank meeting.

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