Euro zone bond yields jump again as oil prices climb, French spread widens
TLT•Euro zone bond yields rose on Thursday as energy prices climbed and investors sold bonds from more indebted countries. France’s 10-year yield rose 6 basis points to 4.931%, while its spread over Germany widened 4 basis points to 142 basis points.
1. Yields rise across Europe
Euro zone bond yields rose sharply on Thursday as energy prices climbed, with investors continuing to sell bonds from more indebted countries such as France and Italy. Brent crude rose 3% to $103 a barrel, around its highest in a week.
2. French risk premium widens
France’s 10-year bond yield rose 6 basis points to 4.931%, near its 24-year high of 4.994% touched on Friday. The spread between French and German 10-year yields widened 4 basis points to 142 basis points, after reaching almost 160 basis points last week, its highest since 2012. France is struggling to contain a budget deficit above 5% of GDP.
3. Energy and rate concerns
Germany’s 10-year yield rose 2 basis points to 3.504%, while the U.S. 10-year Treasury yield gained 5 basis points to 5.331%. The article cited rising energy prices tied to Middle East supply concerns, bets on central bank rate hikes and worries about government debt loads as drivers of the bond-market selloff.
