European government bond yields, which have been on a steady downward trend for years, are suddenly trading at their highest levels in more than two months – and analysts expect this move higher to continue.
The yield on Germany’s 10-year Bund, the benchmark in Europe, was trading at 0.43 percent on Monday. It has soared from a record low of 0.05 percent just last month, as investors reassess bullish bets on government bonds in Europe and the U.S., where debt yields have also risen sharply.
Yields rise when the price of a bond falls, reflecting a greater risk attached to holding that bond.
“We are in a correction in government bond markets, but we’re still looking for higher yields in the next few weeks,” Christoph Rieger, head of rate and credit research at Commerzbank, told CNBC.
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