To The Moon

European short-term government bond yields edged higher as rising oil prices sparked market concerns over the inflation outlook.

Long-term bond yields, meanwhile, pulled back, driving a twist flattening of the yield curve.

The German two-year government bond yield rose as much as 3 basis points to 3.16% as Brent crude climbed to around $107 per barrel; the yield had earlier fallen to 3.10% before reversing its decline.

The German 10-year government bond yield stood at 3.48%, roughly flat, having fallen as much as 3 basis points to 3.45% during the session; the 30-year yield dropped 1 basis point to 3.85%.

UK short-term government bonds moved lower, with the two-year yield rising 2 basis points to 4.91%; the 10-year yield was essentially unchanged at 5.44%.

Global markets saw thin trading, with bonds broadly little changed; the US Treasury market was closed for a holiday.

Market overview:

German government bond yields fell 1 basis point to 3.48%; German government bond futures rose 12 ticks to 120.96; Italian 10-year government bond yields declined 1 basis point to 4.57%; the Italy-Germany government bond spread was little changed at 109 basis points; French 10-year government bond yields rose 4 basis points to 4.90%; the 10-year UK government bond yield was little changed at 5.44%.