The yield spreads between Italian and French government bonds versus German bunds narrowed, with long-term bonds outperforming, as prospects of a potential end to the U.S. government shutdown boosted risk appetite.

The France-Germany yield spread tightened by 3 basis points to 74 basis points, the narrowest since August. The yield on 30-year French government bonds fell 5 basis points to 4.23%, while Italy’s 30-year bond yield saw a similar decline.

German bunds also rose but with smaller gains; the 10-year yield dropped 2 basis points to 2.64%.

UK gilts underperformed, with yields rising across the curve by up to 2 basis points after the UK Health Secretary denied rumors of plotting to replace Prime Minister Starmer.

Market Highlights: - Germany’s 10-year bond yield fell 1 basis point to 2.65%. - German bund futures rose 8 ticks to 129.31%. - Italy’s 10-year bond yield declined 3 basis points to 3.37%. - The Italy-Germany yield spread narrowed by 2 basis points to 73 basis points. - France’s 10-year bond yield dropped 5 basis points to 3.38%. - The UK 10-year gilt yield rose 1 basis point to 4.40%.