Deutsche Bank Warns of Pricing Gap Between European Bonds and Equities

Key Facts

1The French-German 10-year yield spread widened by 32 basis points last week, the largest weekly increase since 1990.

2Deutsche Bank argues that equity and credit markets have not yet reacted to European sovereign stress, suggesting a potential downward repricing.

Deutsche Bank issued a warning regarding a significant divergence between the bond market, which is signaling high stress, and the equity market, which remains near record highs. According to investinglive.com, the French-German 10-year yield spread widened by 32 basis points last week, marking the largest weekly increase since 1990 and leaving the spread at its widest level since 2012.

The bank argues that equity and credit markets have not yet reacted to European sovereign stress, suggesting a potential downward repricing if risk assets begin to reflect the fragmentation risks visible in bonds. DB closed at $34.97 on October 2, 2026, as Italian spreads also widened by 23 basis points and oil prices remained above $100 a barrel, creating a macro environment that equities have largely ignored so far.