European bond yields decline after the US inflation shock to the markets

Bond yields in the euro zone fell slightly on Wednesday, with debt markets stabilizing following US inflation data that was higher than expected, and sparked turmoil in the US Treasury bond market on Tuesday, before its repercussions extended to European markets.

US bond markets will be closed on Wednesday, on the occasion of the Veterans Day holiday, which reduces liquidity in the market and limits global trading activity, according to Reuters.

The 10-year German bond yield, which is the benchmark in the euro zone, fell slightly to 3.302 percent. Yields move inversely with bond prices.

The German benchmark yield rose 4 basis points on Tuesday, coinciding with the US 10-year borrowing cost rising by 12 basis points, following the release of data showing price pressures in the United States rising during October at a pace that exceeded market expectations.

Traders have increased their bets on the US Federal Reserve raising interest rates, and now almost certainly expect an increase in December.

Given the importance of the US economy, the data also prompted traders to increase their bets on the European Central Bank raising interest rates in December, amid expectations that this step is almost certain.

The statements of the European Central Bank's chief economist, Philip Lane, to the Bloomberg TV network also reinforced these bets. He said that raising interest rates in December would be a “prudent approach” if the data did not witness a significant change.

In Germany, the two-year bond yield, the most sensitive to interest rate expectations, settled at 3.075 percent on Wednesday, after rising 8 basis points on Tuesday, hitting its highest level in about two weeks.

The interest rate hike bets come despite the sharp decline in oil prices, which pushed Brent crude to levels close to its lowest levels since late August, following the US midterm elections, which constituted a setback for President Donald Trump and his policy of war against Iran.

In the absence of major economic data on Wednesday, traders' attention will be focused on the statements of European Central Bank President Christine Lagarde later in the morning.

Germany also intends to offer long-term bonds worth 2.5 billion euros for subscription, from issues in 2047 and 2056.

In France, the 10-year bond yield fell by 2 basis points to 4.764 percent, after rising 7 basis points on Tuesday.

The closely watched spread between French and German bond yields, a measure of the risk premium associated with France, also fell slightly to 146 basis points. This spread had risen to 178 basis points in October, its highest level since 2011.

The Saudi Automotive Services and Equipment Company (SASCO) recorded a net loss of 20.79 million riyals ($5.54 million) during the third quarter of 2026, compared to a net profit of 8.41 million riyals ($2.24 million) during the same period of the previous year.

On a quarterly basis, the company turned to a loss, compared to a net profit of 56.81 million riyals ($15.15 million) during the second quarter of the current year.

The company stated, in a statement on the Saudi Stock Exchange (Tadawul) today, Wednesday, that the shift to a loss is due to the increase in the cost of sales at a rate exceeding the growth in revenues, the decrease in dividends received from investments, the increase in the provision for credit losses and general, administrative and marketing expenses, in addition to the decrease in other gains and the increase in zakat expense, despite the growth in sales and other operating revenues, the decrease in financing costs and the increase in financing revenues.

The company's revenues increased during the third quarter by 10.4 percent year-on-year, to reach 3.38 billion riyals ($902.36 million), compared to 3.07 billion riyals ($817.35 million) during the same quarter of 2025.

SASCO attributed the sales growth to the increase in quantities sold as a result of the expansion of the station network, the impact of rising diesel prices, in addition to the additional contribution from the new SASCO Palm sites.

Nine-month results

By the end of the first nine months of 2026, SASCO’s net profit declined by 71 percent to reach 12.31 million riyals ($3.28 million), compared to 42.40 million riyals ($11.31 million) during the same period of the previous year.

On the other hand, revenues increased during the period by 10.7 percent, reaching 9.63 billion riyals ($2.57 billion), compared to 8.70 billion riyals ($2.32 billion) in the comparative period.

The company attributed the decline in profits to an increase in the cost of sales at a rate exceeding the growth in revenues, an increase in the provision for credit losses, financing costs, and zakat expense, in addition to a decrease in other gains, despite the growth in sales, the increase in profit resulting from the revaluation of the “xAI” investment compared to the previous year, the decrease in general, administrative and marketing expenses, and the realization of profits from the sale of “Aramco” shares.

The head of the Turkish Banking Regulatory and Supervision Authority (BDDK), Shihab Kavcioglu, said on Wednesday that he asked President Recep Tayyip Erdogan to accept his resignation, against the backdrop of accusations linking the authority to the investment funds crisis in the country, denying the validity of those accusations.

Kavcioglu, who served as governor of the Turkish Central Bank between 2021 and 2023, explained in a post on the “X” platform that he requested to be allowed to step down “in light of the recent accusations related to the Banking Regulatory and Supervision Authority and myself,” adding that he took this step so that “the authority would not be exposed to further harm.”

On Wednesday, the opposition newspaper Sozcu quoted Kavcioglu as denying reports circulated by Turkish media that he owned money invested in funds under investigation or received bribes, stressing that the authority had nothing to do with the funds crisis.

The resignation request came after the arrest of senior officials in the authority over the weekend, and then their imprisonment pending investigation, as part of an investigation related to transactions in capital markets that included investment funds.

In September, regulators ordered the liquidation of 131 funds managed by seven asset management companies, after some of them warned of their inability to meet investor recovery requests.

The assets of these funds exceeded $20 billion in just three years, with about half a million investors, including politicians, former officials, and celebrities, seeking to achieve high returns to compensate for the decline of the Turkish lira and high inflation.