Tradeweb Government Bond Update – October 2025
Global 10-year government bond yields fell across the board in October. The only exception was Japan, where they reached a three-year high of 1.69% on October 25, before finishing the month at 1.65% and unchanged from September. On October 21, Sanae Takaichi was elected as the country’s first female prime minister, who went on to sign a new minerals deal with U.S. President Donald Trump a week later. The annual inflation rate rose to 2.9% in September from August’s 10-month low of 2.7%, while the Bank of Japan maintained interest rates at 0.5% on October 30.
In the U.S., the yield on the 10-year Treasury benchmark note fell five basis points to 4.1%. On October 29, the Federal Reserve announced a 25-basis-point rate cut, a move widely expected by markets. The annual inflation rate in the country rose to 3% in September, its highest level since January.
Bhas Nalabothula, Head of U.S. Institutional Rates at Tradeweb, said: “Yields on most U.S. Treasury securities declined across the curve in October, as markets responded to the Federal Reserve’s rate cut and evolving inflation expectations. According to Tradeweb data, the swap market is pricing a 56% probability of a further cut in December, with expectations for additional easing declining into early 2026, suggesting that investors see the Fed moving cautiously, as inflation progress remains uneven.”
Over in Europe, the month’s biggest mover was the UK 10-year Gilt yield, which decreased 29 basis points to 4.41%. Annual inflation remained steady at 3.8% in September, unchanged from the previous two months and below market expectations of 4%. The S&P Global UK Manufacturing PMI rose to 49.7 in October from 46.2 in the previous month. Similarly, the GfK Consumer Confidence Index increased to -17 from -19 in September.
On October 30, the European Central Bank voted to hold interest rates at 2%. The German 10-year Bund yield dropped eight basis points to 2.63% at the end of the month. According to preliminary estimates, the country’s annual inflation rate inched lower to 2.3% in October from the year-to-date high of 2.4% in the month prior. Meanwhile, the HCOB Germany Manufacturing PMI for October increased slightly to 49.6 from 49.5 in September, signalling that manufacturing activity continued to show weak momentum at the start of the fourth quarter.
In neighbouring France, political instability continues to fuel uncertainty and weigh on confidence in the country’s fiscal direction. On October 10, President Emmanuel Macron re-appointed Sébastien Lecornu as Prime Minister only four days after he resigned from the post. The French 10-year government bond yield decreased five basis points to 3.42%, while the annual inflation rate eased to 1% in October, down from 1.2% in September, according to initial forecasts.
Finally, Italy’s 10-year benchmark bond yield climbed 17 basis points to 3.39%, the second-biggest move for the month. Early estimates indicate that the annual inflation rate in the country fell to 1.2% in October from 1.6% in the month prior, the lowest level since October 2024. Furthermore, the HCOB Italy Manufacturing PMI rose to 49.9 during the month, up from 49 in September, pointing to a near stabilisation in the Italian manufacturing sector.
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