Euro zone yields rise for sixth straight session as inflation fears weigh
TLT•Euro zone bond yields extend selloff
Euro zone bond yields rose for the sixth consecutive session on Wednesday, with the global bond market rout showing no signs of abating as fresh escalations in the Middle East pushed oil prices higher again.
Germany's 10-year government bond yield DE10YT=RR, the benchmark for the euro zone, hit its highest level since April 2011. It was last up 3.8 basis points on the day to 3.3763%.
The bond selloff extended a global rout that is raising borrowing costs to multi-decade highs as the Middle East conflict pushes up energy prices, playing into investor fears about inflation and ballooning government debt.
Short-end yields and ECB expectations
Germany's 2-year government bond yield DE2YT=RR, which is more sensitive to interest rate expectations, was last 4 bps higher at 2.9861%. It was trading around its highest level since June 2024.
Money markets were last pricing a near 100% probability of the European Central Bank hiking interest rates when it meets later this month, with a strong chance of a further hike by year-end.
Inflation data and oil prices add pressure
Data on Tuesday showed that euro zone inflation accelerated to 3.3% in August from 2.9% in July, driven almost entirely by higher energy costs as crude oil and natural gas prices both rose, and refiners bumped up their margins.
Oil prices rose again Wednesday as the U.S. and Iran found themselves back on a war footing after the most significant exchange of fire in weeks. Brent crude futures LCOc1 were last up 0.9% on the day to $95.45 a barrel.
