Benchmark European bonds on track for worst weekly selloff since March as energy prices soar

German 2-year bond yields DE2YT=RR were little changed on Friday at 3.19%, having traded around 3 bps higher earlier in the day. They have risen more than 25 bps this week, the most since the first week of the war in early March.

"The week is ending on a chaotic, confusing and very uncertain note, with escalating tensions in the Red Sea seemingly tipping the balance for oil prices, and inflation risks, as the conflicts in the Persian Gulf and Black Sea show no sign of easing," Marc Ostwald, chief economist and global strategist at ADM Investor Services, said.

"The spillover into interest rate markets is becoming more acute."

Benchmark 10-year Bund yields have risen almost 18 bps this week, also the biggest weekly rise since the start of March. They were last 1.7 bps higher on the day to 3.5136%. U.S. 10-year Treasury yields, meanwhile, came close to touching 5% for the first time since October 2023, a high previously hit in 2007.