Tradeweb Government Bond Update – September 2025

Global government debt markets saw mixed yield movements in September, with both rises and declines recorded during the month. Beginning in the Eurozone, French government bond markets remained under pressure in September, as investors continued to reassess the country's fiscal outlook. The yield on France's 10-year benchmark bond fell three basis points to 3.47% at month-end. On September 8, Prime Minister Francois Bayrou lost at a confidence vote, and while the country has a new Prime Minister, Sébastien Lecornu, it is still without an official government. Meanwhile, the annual inflation rate rose to 1.2% in September from 0.9% the month before.

Roderick Joniaux, Head of European Government and Supranational Products at Tradeweb, said: "The 10-year OAT yield climbed to a three-year high of 3.61% on September 2, while the spread over the German 10-year Bund widened to 76 basis points at month-end - its widest level in three weeks. The move highlights persistent investor concerns around France's elevated debt burden and recent credit rating downgrades, with Fitch lowering the sovereign to A+ from AA- and Morningstar DBRS cutting it to AA from AA (high). Against this backdrop, French bonds have become a focal point for gauging sentiment on Eurozone stability, with markets closely watching whether fiscal consolidation efforts can restore confidence in the months ahead."

In neighbouring Germany, the 10-year Bund yield remained unchanged from August at 2.71%. Similar to its French counterpart, the country's annual inflation rate rose from 2.2% in August to 2.4% in September. The HCOB Germany Manufacturing PMI for September was revised upward to 49.5 from the earlier estimate of 48.5, but slightly below August's 49.8, signalling that manufacturing activity remained close to stagnation.

Inflation in the Eurozone rose to 2.2% in September, the first time it has gone above the European Central Bank's target of 2% since April this year. On September 11, the central bank voted to hold interest rates steady at 2%. The Italian 10-year government bond yield fell five basis points to 3.56% at the end of the month. According to preliminary estimates, the country's annual inflation rate remained unchanged in September at 1.6%, slightly under market expectations.

The UK 10-year Gilt yield dropped just two basis points from August to 4.15% at the end of September. The country's annual inflation rate stayed at 3.8% in August, matching July's figure and remaining near the peak levels recorded in January 2024. The Bank of England voted 7-2 to keep interest rates unchanged at 4% on September 18. The S&P Global UK Manufacturing PMI fell to 46.2 in September from 47 in the previous month, while the GfK Consumer Confidence Index fell to -19 from -17 in August.

Over in the U.S., the 10-year Treasury yield finished September at 4.15%, seven basis points lower than the month prior. On September 17, the Federal Reserve lowered borrowing costs for the first time since December last year to a range of 4% to 4.25%. The country's annual inflation rate accelerated to 2.9% in September, the highest level since January 2025, after holding steady at 2.7% in June and July.

Finally, in Asia Pacific, the yield on Japan's 10-year government bond rose four basis points to 1.65% at month end. The benchmark bond also reached a three-year yield high of 1.66% on September 22. On September 19, the Bank of Japan announced it was maintaining interest rates at 0.75%. The country's annual inflation rate eased once again to 2.7% in August from 3.1% in the previous month.

Related Content

Tradeweb Government Bond Update - August 2025