What's Driving European Bond Yields Higher

Dow Jones09-23 23:19

European government bonds are facing another brutal selloff. A stronger economy is partly to blame.

A measure of eurozone business activity rose at its fastest pace in more than three years, data showed Wednesday. In France, where growth has been flagging, activity rebounded to a two-year high.

-- French 10-year yields jumped 0.13 percentage point to 4.6%, a new post-financial crisis high. Greek and Italian yields rose by a similar amount.

-- German 10-year yields rose 0.8 point to 3.53%.

The rise in yields came as investors bet that the European Central Bank will keep raising interest rates. Derivatives markets are showing nearly a full percentage point of rate hikes from the ECB in the next year. That's up 0.15 percentage point from a day earlier, according to Tradeweb data.

Investors have questioned how much the European Central Bank can raise rates to combat war-driven inflation without causing a downturn. Wednesday's data should ease worries that the economy is too weak to withstand higher rates, while a jump in European diesel prices underscored the inflation risk facing the continent.

At the request of the copyright holder, you need to log in to view this content

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment