Hello,

As promised, we will now finish our commentary on the current yield curves in Europe and the US which we started in last week’s edition of the Weekly Investment News. In Euro-denominated government bonds, the yield curve is currently upward sloping. What that means is simple: In order to tie their money up for longer maturities, investors are demanding higher yields. Moreover, what this shape typically suggests is an expectation for economic expansion and future inflation.

 

However, taking a deeper dive tells you that the yield curve has steepened upwards due to growing rift between short- and long-term yields in 2025. ECB rate cuts have dragged short-term yields down. Meanwhile, plans across the continent to expand infrastructure and defence spending have exacerbated fears of fiscal intolerance, and driven long-term yields up. Investors are demanding greater compensation for holding long-term bonds – particularly in France, where political turmoil has added to debt jitters.

 

But the European bond market is influenced by ripples from across the Atlantic too. In the US, the yield curve has also begun to steepen. Analogous to the situation in Europe, yields at the short end of the curve have fallen since the Fed recommenced its rate cutting policy. Market concerns around the swelling national debt, along with expectations for further rate cuts, could result in the yield curve steepening further from here. However, as we all know, there are plenty of examples of the theory not matching the reality within bond markets.

 

If you didn’t get to attend one of our main Retirement Conferences, don’t worry – our main events in Limerick, Cork, and Dublin have now finished, but we’re currently visiting a whopping 13 regional locations around Ireland. There’s sure to be a venue that suits you, and some of these shorter regional events are already underway! Please join us for one of our insightful and engaging regional sessions, designed to help you guide your clients through the decision-making process during periods of volatility.

 

As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.