The yields of US, European and UK bonds rise simultaneously as the market focuses on the Federal Reserve's decision and the UK's budget.

智通财经2026/10/28 10:06

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On Wednesday during the European morning session, yields on US Treasuries, Eurozone government bonds, and UK government bonds generally climbed as investors awaited the Federal Reserve rate decision and the unveiling of the UK budget.
The yield on the 10-year US Treasury rose by around 2 basis points to 5.010%, the 10-year German government bond yield increased by about 2 basis points to 3.370%, and the 10-year UK gilt yield was up around 3 basis points to 5.366%.
The market broadly expects the Federal Reserve to keep rates unchanged this time, though a hike remains possible before year-end. Money market pricing shows about a 90% probability of no change, with expectations for a December rate hike almost fully priced in.
The head of sovereign debt at one institution noted that while the economy is performing robustly, signs of weakness are appearing in the labor market. This combination supports a wait-and-see approach. The normalization of Middle Eastern oil flows tends to support a medium-term decline in oil prices, but the risk of escalating conflict after the US midterm elections is keeping oil prices elevated.
The head also pointed out that large-scale borrowing by AI companies and the US Treasury has helped keep yields high, objectively sharing some of the Federal Reserve's tightening burden.
Another institution's head of macro strategy said that patience should not be confused with complacency; although the labor market appears less strong and market rates remain high, inflation expectations are unchanged, and the Federal Reserve still needs to remove some accommodation.
Bond investors are also paying attention to the UK budget and to the financing plan for fiscal years 2026 to 2027, which will be released later by the Debt Management Office.
A UK economic analyst at one institution believes investors expect this budget to maintain fiscal consolidation. As this is the first budget under the new Prime Minister and Chancellor of the Exchequer, the measures are expected to be moderate and unlikely to disrupt the UK government bond market.
Another institution's head of market strategy said that all signs point to a cautious budget, leaving “bond vigilantes” with nothing to do.
Investors are also starting to look ahead to the US Treasury’s quarterly refunding announcement next week. Earlier in October, yields on 10- and 30-year US Treasuries spiked to their highest levels in 24 years.
A strategist at one institution stated that the questionnaire sent by the Treasury to primary dealers is an important step in advancing the discussion around issuance adjustments. Analysis of their position data shows a decline in demand for longer-dated US Treasuries.
The strategist believes that, given rising borrowing needs and the market's weighted average duration approaching historical highs, there is ample justification for more proactively shortening the maturity structure of future issuance.

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The yields of US, European and UK bonds rise simultaneously as the market focuses on the Federal Reserve's decision and the UK's budget.

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