Euro zone yields rise to multi — year highs as bond selloff intensifies

Rising oil prices weigh on bonds France in focus ahead of an election year French-German spread widens (Updates for late European morning trading) LONDON, Sept 24 (Reuters) — A selloff in euro zone bonds resumed on Thursday, pushing yields to multi-year highs, following another rise in oil prices and as upbeat business data strengthened the case for further monetary tightening from the European Central Bank. 575%, its highest level in over 17 years. Bond yields move inversely with prices. "The driver behind this is most definitely the renewed increase in oil prices," said Hauke Siemssen, rates strategist at Commerzbank.

" Crude oil prices rose again on Thursday as diplomatic talks between the US and Iran showed few signs of progress towards ending the war, pushing Brent back above $106 per barrel to its highest level in over a week. Ecb To Hike More Investors have been watching energy prices closely for hints on the possible path ahead for ECB interest rate policy. The central bank has raised rates twice this year as it attempts to get ahead of energy-driven inflationary pressures, while markets are pricing in more tightening going forward.

Strong economic data has also contributed to the selloff in bonds, with German business morale rising more than expected in September, more evidence that the economic recovery was starting to take hold in the bloc's largest economy. On Wednesday, data showed business activity in the euro zone and the United States was accelerating. Money market futures were pricing in 35 basis points of tightening from the ECB by the end of the year, implying one quarter-percentage-point hike and a roughly 40% chance of a second. Futures imply four 25 basis point rate hikes over the next 12 months.

Bank of America Global Research said it expects the ECB to raise its deposit rate by a quarter-point in December, having previously called for the central bank to keep rates unchanged for the rest of the year. 293%. French Yields Touch 18-year High The bond selloff has been most pronounced in the euro zone countries with the most debt, such as France and Italy, where yields have risen more. France has been in the spotlight as it heads towards a 2027 election year with a substantial primary deficit and budget risks stemming from its fragmented parliament.

69%, its highest level in over 18 years. The spread between French and German 10-year yields widened to over 111 bps, its widest level since mid-2012. A widening spread is generally seen as a sign investors perceive greater risk in holding French government debt relative to Germany's. The yield on the 10-year US Treasury rose as much as 16 basis points on Wednesday to its highest since July 2007, its sharpest daily increase since the so-called Liberation Day market rout in 2025.

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