Eurozone periphery bonds sag following global sovereign sell-off; US 10-year yields post biggest gain in 2016

The Eurozone periphery bonds plunged Monday following global sovereign sell-off on rising speculation Donald Trump will increase spending to boost the world’s largest economy.

The French 10-year bond yields, which moves inversely to its price, rose 8 basis points to 0.832 percent, Irish 10-year bonds yield jumped 6-1/2 basis points to 1.069 percent, Italian equivalent bounced 9 basis points to 2.132 percent, Netherlands 10-year bonds yield inched 5 basis points higher to 0.537 percent, Portuguese equivalents up 9 basis points to 3.588 percent and the Spanish 10-year bonds yield climbed 9 basis points to 1.581 percent by 09:40 GMT.

The Eurozone bonds have been closely following developments in the U.S. debt market. The United States benchmark 10-year Treasury yield bounced 12 basis points to 2.237 percent for the first time in 2016. Also, the German 10-year bund yields hit highest this year to 0.350 percent and the UK 10-year gilt yields hit highest since May to 1.460 percent.

A heavy sell-off in government bonds was supported by rising expectations that the U.S. President-elect Donald Trump's policies, such as fiscal expansion and protectionism on international trade, could support growth and inflation.

Last week, the United States Republican candidate Donald Trump pinned his victory against Democrat opponent Hillary Clinton in the 2016 presidential election. Investors again revised the outlook for US interest rates after Donald Trump's victory, with the probability of a December rate hike by the Federal Reserve going from as low as 30 percent to as high as 84 percent.

Additionally, the fall in the number of people opting for unemployment benefits in the United States has strengthened the probability of a December interest rate hike by the Federal Reserve.

Lastly, investors remain keen to focus on the upcoming German Q3 GDP, Eurozone Q3 CPI, Eurozone CPI, German PPI followed by ECB President Mario Draghi and German Bundesbank President Jens Weidmann speech.

Meanwhile, the pan-European STOXX 600 index was up 1.05 percent and the euro-area blue-chip gauge the STOXX 50 jumped 1.21 percent, the DAX traded 1.01 percent higher, the PSI20 Index climbed 0.34 percent and the CAC-40 rose 1.34 percent by 09:40 GMT.

While at 09:00 GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -103.80 (lower than -100 represents highly bearish trend).For more details, visit http://www.fxwirepro.com/currencyindex