Market Information Thursday 28 August 2025

France’s 10-year bond yield spread over Germany widened to 80 basis points, up from 65 two weeks ago, as borrowing costs rose to 3.53 percent. The move follows Prime Minister Francois Bayrou’s call for a September confidence vote on €44 billion in spending cuts and tax hikes, which has fuelled investor unease. Analysts warn the gap could reach 100 basis points while Fitch may downgrade France to A+ on September 12th, threatening both bond stability and a fragile 0.7 percent growth outlook.

The European Union will fast track legislation to remove tariffs on US industrial goods and lower duties on certain seafood and agricultural products in order to secure reduced American tariffs on European cars. EU auto exports currently face a 27.5 percent tariff in the US, with Germany alone sending $34.9 billion worth of cars and parts last year. The deal, seen as favouring the US, would allow tariffs on European automobiles to fall to 15 percent retroactive to August 1st if passed this month.

South Korea’s central bank kept its policy rate at 2.5% for the second straight meeting, citing stable inflation and modest economic growth. The Bank of Korea upgraded its 2025 inflation forecast to 2% and GDP growth to 0.9%, with exports still strong but expected to slow under U.S. tariffs. Recent trade deals with the U.S. included $350 billion in South Korean investment and a $50 billion aviation purchase, while analysts see a possible rate cut as early as October.

The 6M Euribor decreased with 1 basis point to 2.06% compared to previous business day. The 10Y Swap decreased with 2 basis points to 2.66% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.