German government bond yields rose on Monday from their lowest levels in two months, with oil prices rising, at a time when investors were cautious ahead of the US midterm elections, which are seen as an important test of risk sentiment in global markets.
German borrowing costs declined during October, as investors turned to safe assets following a wave of selling shares of companies linked to artificial intelligence, coinciding with traders reducing their bets on the European Central Bank raising interest rates, according to Reuters.
Brent crude futures rose by about 2 percent on Tuesday. Prices had recorded a sharp decline the previous day, after talks between Iranian and Qatari officials raised hopes of reaching a negotiated solution to the conflict.
The 10-year German government bond yield, which is considered a benchmark for euro zone markets, rose by 2.5 basis points to 3.32 percent, after recording 3.2898 percent on Monday, its lowest level since August 31.
Analysts expect German bonds to remain supported by the possibility of Democrats achieving victories in the US elections, which may put pressure on Wall Street and limit investors’ appetite for risk on a broader scale.
Opinion polls and estimates by independent analysts indicate that Democrats are on their way to regain control of the House of Representatives, while the competition for the Senate remains close.
The two-year German bond yield, which is most affected by interest rate expectations, rose 1.5 basis points to 3.03 percent.
Euro short-term interest rate futures (ESTR) showed that markets expect the deposit rate to reach 3.16 per cent by late 2027, from the current level of 2.50 per cent, and to 2.72 per cent by December 2026.
The difference in yield between French government bonds and their German counterpart reached 162 basis points, after recording 177.72 basis points on October 22, which is its highest level since November 2011.
The exchange rate of the US dollar exceeded the level of 50 Turkish liras for the first time in the free exchange market in Turkey, in light of the continued decline of the Turkish currency against the dollar.
The selling price of the dollar rose to 50.0021 liras in the morning hours of Monday, November 3, while the buying price reached 49.9892 liras.
Thus, the selling price of the dollar exceeded 50 liras, while the euro traded at about 56 Turkish liras.
The Turkish lira recorded a noticeable decline against the dollar during the past year. The exchange rate of the US currency was about 42 liras in November 2025, compared to about 50 liras currently. Which means an increase in the price of the dollar by about 19 percent within 12 months.
This development in the exchange market coincides with the Turkish Central Bank reducing interest rates. On October 22, he decided to reduce the key interest rate by 100 basis points, from 37 percent to 36 percent.
Although the Central Bank indicated the emergence of indicators of a decline in underlying inflationary pressures, it warned of the continued risks that threaten price stability, in light of the rise in energy prices and the escalation of geopolitical tensions.
Pedro Machado, responsible for banking supervision at the European Central Bank, said on Tuesday that European banks should not expect to ease basic capital controls, which were adopted in the wake of the financial crisis, as part of efforts to simplify banking rules, warning that these controls constitute a guarantee that prevents banks from underestimating the risks they face.
In light of the ongoing debate in Europe about ways to reduce regulatory burdens and enhance lending, Machado rejected demands issued by some banking circles to reduce capital requirements imposed after the global financial crisis in 2008, according to Reuters.
In particular, he defended the “minimum output” rule, a global rule that limits banks’ ability to reduce capital requirements by using their internal models to assess risks.
Machado said during a financial conference: “We must maintain strict capital standards, preserve the role of minimum outputs as a precautionary guarantee for internal models, and continue to address the costs of resolving troubled banks, ensuring that the expansion in the size of institutions does not come at the expense of taxpayers.”
European banks have intensified their pressure to demand easing of regulatory rules, usually because they face an unequal competitive situation compared to their American counterparts, and that easing requirements may allow more financing to be provided to the economy.
But Machado said that studies provide little evidence that reducing capital requirements will achieve tangible economic gains, and he also cast doubt on claims that major US banks operate under a significantly less stringent regulatory regime.
However, it reiterated its support for the European Central Bank to provide specific regulatory facilities to smaller banks, which would reduce the reporting and oversight burdens imposed on them, without compromising precautionary standards.
