New issuance volumes of euro-denominated bonds were way up this week, with reverse yankees from hyperscalers driving supply. The US mid-term elections set the mood music, with a "clean sweep" for Democrats triggering a boom for bonds and a bust for stocks.
As it became clear the Democrats had reclaimed control of both the House of Representatives and the Senate (see 9fin’s take here), US investors began weighing the likelihood of tougher tech regulation. AI-exposed shares started to slump.
The S&P 500 fell 4.36% on Thursday (5 November), its biggest one-day drop since the Liberation Day volatility of April 2025. At the same time, hopes of fiscal compromise sparked a rally in US Treasuries, pulling 10-year yields down 8.2bps since last Friday to 4.831%.
The classic risk-off move supported bonds more broadly. European governments were caught in the up draught, offering primary markets a supportive rates backdrop.
Yields on 10-year French OATs were down 13.4bps to 4.760% over the past week, while equivalent Bunds shed 7.3bps to 3.216. In the UK, meanwhile, 10-year gilts also rallied with yields down 7.2bps to 5.119%.
While AI-related stocks sold off, the euro denominated bonds sold by hyperscalers this week performed...
