Rates: Government bond performance since peak yields in early October
Reviewing peak yields.
Group Research - Econs, Eugene Leow4 Nov 2026
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Government bonds across the globe have generally performed well, with 10Y yields across the DM space peaking around early October. Notably, investors have become more cautious on four different areas – paring optimism on the AI trade, anticipating a gridlocked government in the US post-midterms, sovereign stresses in France and resurgent oil prices (speculation about another peace deal notwithstanding). We would argue that the shifting AI narrative may well be the largest factor driving UST outperformance (10Y US yields dropped the most among the markets we track), with meaningful spillovers unto JGBs and KTBs. Highly correlated SGS yields and HKD swaps also fell meaningfully over the same period. That said, IndoGBs and IGBs were the two clear underperformers. IndoGBs are suffering collateral damage after MSCI flagged that it may downgrade Indonesia from Emerging Market status to Standalone Market status. Investors may also be disappointed that BI did not hike rates at its prior meeting to anchor confidence. That said, IndoGBs have sold off a lot, and investors may be willing to nibble in the front-to-belly tenors. The performance of IGBs will likely depend on the oil trajectory. Tighter liquidity and expectations of a hawkish RBI probably helped to anchor longer-end yields.



Eugene Leow

Senior Rates Strategist - G3 & Asia
eugeneleow@dbs.com



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