Rates Weekly: Rates market calm despite weakening risk appetite

EUR rates:Recap of the week:   This week, risk appetite declined, leaving risky markets fragile despite easing US-China trade tensions and strong Q3 corporate earnings.  The ongoing US government shutdown is impacting macroeconomic clarity, while mixed labor market signals complicate expectations for the Fed's policy. Consequently, yields rose slightly across both € and $ curves, with the 10-year Bund lagging behind the 10-year US Treasury, influenced by pressure on real rates.  Volatility remains low, indicating cautious market sentiment as the year winds down.Tactical view:   We maintain a neutral bias on duration, awaiting clearer US signals before considering a shift to a bearish stance, with the 10Y Bund stable around 2.55-2.65%. Structural steepening drivers for EUR 10s30s remain, but we recommend a neutral positioning until year-end, expecting limited movement. Swap spreads are tightening, targeting -5bps as the US market's influence prevails. In spreads, we see potential stability in French OATs amid political uncertainties.Insights of the week:  Rates Volatility: The great hibernation