Euro zone government bond yields fell across the board on Monday as investors digested the potential impact of Donald Trump’s second US presidential term and the collapse of the German government last week.

German 10-year bond yield, the benchmark for the euro zone, fell 3 basis points (bps) to a more than one-week low at 2.34% after ending last week about flat.

Yields move inversely to prices.

Euro zone yields rise after better than expected data

German Chancellor Olaf Scholz said on Sunday he would be willing to call a vote of confidence in parliament before Christmas, a move that would pave the way for snap elections following the collapse of his three-way governing coalition.

Europe’s largest economy was thrown into disarray last week with the collapse of Scholz’s coalition and disagreements over government spending. Germany’s 10-year swap spread, a gauge of risk appetite, as well as the market’s view of an issuer’s credit quality, was at -4 bps after hitting its lowest level since at least 2003 last week.

Trump’s presidential election win last week drove US Treasury yields sharply higher on bets that his tax and tariff policies would stoke inflation and could slow the Federal Reserve’s pace of interest rate cuts.

The outlook for Europe, however, is more complicated.

While euro zone bonds have moved broadly in line with their US equivalents this year, if Trump were to impose the heavy tariffs he has threatened on Europe, it could hurt economic growth and push the European Central Bank to accelerate rate cuts, sending yields lower.

As things currently stand, there is no reason for the ECB not to cut interest rates in December but the decision will be based on the data available then, ECB policymaker Robert Holzmann said in remarks published on Sunday.

Currently traders are fully pricing in that the ECB will deliver a quarter-point rate cut in December.

Elsewhere, Spain’s 10-year yield dipped 3 bps to 3.074%, in line with euro zone peers even as credit ratings agency Fitch on Friday raised its outlook on the country to “positive” from “stable”.

Economic data calendar was light on Monday and some key reports due later in the week included Germany’s ZEW survey, minutes from ECB’s October policy meeting as well as US consumer price index data.

Bond markets in France and the US were shut for holiday.