European equities rise as Treasury yields retreat from highs

• Eurostoxx +0.6%
• Germany DAX +0.8%
• France CAC 40 +0.4%
• UK FTSE +0.8%
• Spain IBEX +0.8%
• Italy FTSE MIB +0.7%

European markets opened with solid gains, with advances spread widely across the region. Germany and Spain posted some of the strongest performances.

Support came from a slight easing in bond yields on Tuesday. The 10-year Treasury yield softened to 5.20%, after hitting an overnight peak of 5.29%. That gave equities some relief following recent pressure from climbing borrowing costs.

Still, it is too early to declare a clear recovery. The bond market continues to pose the main threat, and given the steep selloff seen lately, yields could quickly move higher again and weigh on stocks.

The mood at the open is therefore cautiously optimistic rather than a full risk-on shift. The retreat in yields is providing a lift, visible also in a small bounce in US futures. S&P 500 futures rose 0.3% and Nasdaq futures added 0.2%.

But investors are likely to remain hesitant about pushing the equity rebound too far while the rates outlook stays uncertain.

If Treasury yields hold steady, stocks may keep their early gains. Yet a fresh rise in yields could quickly test that strength.