Euro Bonds Stabilize After Election Turmoil

Euro zone government bonds steadied on Tuesday following a sell-off triggered by strong far-right performances in European Parliament elections, leading to a snap election in France. France's 10-year bond yield saw its largest one-day surge in 11 months. Bond yields in Germany and Italy also saw significant movement.

Euro zone government bonds steadied on Tuesday following a sell-off the previous day due to a strong showing for far-right parties in the European Parliament elections that prompted a snap election to be called in France. France's 10-year bond yield surged more than 12 basis points (bps) on Monday, its biggest one-day jump in 11 months as the new election raised concerns about the country's already fragile public finances, analysts said.

On Tuesday, France's 10-year yield was little changed at 3.239%. Bond yields move inversely to prices. Germany's 10-year yield, the euro zone benchmark, was down 1 bp at 2.665% having risen 6 bps on Monday.

Italy's 10-year yield was down 2 bps at 4.062% after jumping 11 bps on Monday to its highest level since December. The spread between Italy's and Germany's 10-year yields narrowed 1 bp to 139 bps.