Stock sale is accompanied by bond market confidence boost

In the financial world, a significant shift was observed on Monday as long-term bond yields rose across various markets. The UK and France saw their long-term government bond yields reach their highest levels in over a decade.

In the UK, the yield on the 30-year gilt climbed, with Chancellor of the Exchequer Rachel Reeves expected to announce tax hikes in her upcoming autumn budget. Meanwhile, the 10-year UK gilt stood at 2.78% on the day in question.

Across the Channel, the yield on the 30-year German Bund climbed five basis points to 3.41%, its highest level since 2011. Christian Sewing, CEO of Deutsche Bank AG, predicted that high bond yields would persist in the coming months due to global political uncertainties, lack of reforms, and increasing debt.

The Bundesbank is expected to continue raising interest rates on long-term government bonds in Germany in the coming months to combat inflation and maintain price stability.

The sell-off seen in the bond market a day earlier appeared to subside, with calm returning to the market on Monday.

In Europe, stocks showed slight gains in the morning. The DAX index stood at 23,628, up 0.6% from Tuesday's close, while the Euro Stoxx 50 index was at 5,334 points, up 0.8%.

The debt brake in Germany has been largely relaxed, allowing the government to take on higher debt.

Elsewhere, the US Federal Reserve is set to publish its Beige Book in the evening (CET), along with the release of the purchasing managers' indices for European services and US industrial orders.

In the tech sector, Salesforce, a SAP rival, will be in focus due to the publication of its quarterly results. Investors hope for continued tailwinds from the AI boom and favorable exchange rates, following Salesforce raising its growth targets for the full year in May.

Meanwhile, French Prime Minister François Bayrou is expected to lose a confidence vote next week, with opposition parties resisting cuts to state spending proposed by the Prime Minister.

Christine Lagarde, ECB President, will speak at the annual meeting of the European Systemic Risk Board on Wednesday, with investors awaiting her speech following the surprise rise in eurozone inflation above the ECB target.

The market continues to navigate through a complex landscape, with various factors influencing its direction. As always, staying informed and adaptable is key for investors.