Eurozone government bond yields were largely steady on Tuesday as the German 10-year yield sat at its lowest level since August. A global retreat in technology equities and caution before the U.S. midterm elections pushed institutional investors into core sovereign debt. Heavy Big Tech bond issuance in Europe adds a supply risk.
The benchmark German 10-year yield fell to 3.29%, breaking below previous autumn support and marking its lowest level in nearly three months. The policy-sensitive two-year Bund stood at 3.03%.
Apple's warning that rising memory chip prices would squeeze profit margins through the holiday quarter spurred the caution. Defensive positioning ahead of the U.S. vote compounded it.
U.S. tech giants tap European debt markets
Europe's bond market also faces a supply headwind. Major U.S. technology companies are increasingly turning to European investors to finance AI infrastructure, according to a Reuters report.
Alphabet launched its second euro-denominated bond sale of the year on Monday, after a 9 billion euro ($10 billion) multi-tranche issue in May. Oracle, meanwhile, plans to raise $20 billion through bond and share offerings for its datacenter and cloud build-out.
Fixed-income managers expect Meta Platforms, Amazon and Microsoft to follow, accelerating borrowing across euro, sterling and Swiss franc credit markets in the coming months.
Supply could pressure European borrowers
The wave cuts both ways for European fixed-income desks. It expands the supply of high-grade, liquid corporate debt for asset managers, but strategists warn that the volume threatens to crowd out European issuers and push broader borrowing costs higher.
The timing is awkward for European sovereigns and companies, which are already absorbing heavy sovereign issuance, sticky energy-fueled inflation and lingering political instability.
France shows the strain most clearly. The benchmark 10-year OAT yield hovered near 4.97% after Fitch revised the sovereign credit rating outlook to negative late last week, citing fractured parliamentary politics and deteriorating deficit-reduction prospects.
Source: Investing.com
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