European government bonds fell as surging oil prices heightened inflation concerns. UK gilts underperformed, with a domestic political crisis pushing yields on ultra-long bonds to their highest levels in nearly three decades. The yield on Germany's 10-year government bond briefly surged by 12 basis points to 3.16%, marking the highest level since 2011. Bond markets in Germany, France, the UK, and other countries are heading for their worst week since the outbreak of the Iran conflict in February. The yield on the 30-year UK gilt, which is most sensitive to political risk, jumped by 20 basis points to 5.86%, reaching its highest level since 1998. It is on track for its worst single-day performance since July. Long-term bond yields rose more sharply than short-term yields, leading to a bear steepening of the yield curve. UK gilts were hit harder compared to other bond markets, as investors worry that Prime Minister Keir Starmer could be replaced by a successor inclined toward more relaxed fiscal policies. Market Data: Germany's 10-year bond yield increased by 11 basis points to 3.15%; German bond futures fell by 91 points to 124.30; Italy's 10-year bond yield rose by 15 basis points to 3.92%; The Italy-Germany bond yield spread widened by 4 basis points to 77 basis points; France's 10-year bond yield climbed by 13 basis points to 3.80%; The UK's 10-year gilt yield increased by 17 basis points to 5.16%.
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