Euro zone yields rise as oil prices surge, spread widening slows
TLT•Euro zone yields rose on Thursday as Brent crude climbed 5% to $105 a barrel, intensifying inflation concerns. France’s 10-year yield rose 2 basis points to 4.88%, while the French-German yield spread widened 2 basis points to 138 basis points.
1. Oil lifts yields
Euro zone borrowing costs rose as a 5% surge in oil prices intensified inflation concerns and prompted traders to increase bets on further European Central Bank rate hikes. Brent crude reached $105 a barrel, its highest in more than a week.
2. French debt concerns
France’s 10-year bond yield rose 2 basis points to 4.88%, after gaining as much as 9 basis points early in the session. The spread between French and German 10-year yields widened 2 basis points to 138 basis points, after reaching almost 160 basis points last week, its highest level since 2012. Italy’s 10-year yield fell 1 basis point to 4.63%.
3. German and US yields
Germany’s 10-year yield rose 2 basis points to 3.50%, while its 2-year yield gained 5 basis points to 3.08%. The US 10-year Treasury yield rose 2 basis points to 5.30%, after touching 5.365% on Wednesday, its highest level since 2002.
