Signs of further rate hikes by the European Central Bank sent German government bond yields to a 14-year high yesterday.
Yields on two-year bonds – the rate at which investors are prepared to lend to governments over that period – rose to 2.714 per cent, a level not seen since 2008.
It came after ECB rate-setter Klaas Knot signalled on Monday that the bank will keep raising rates in the months ahead citing the continued risk posed by sky-high inflation.
Buoyant: Yields on two-year German Government bonds – the rate at which investors are prepared to lend to governments over that period – rose to 2.714%, a level not seen since 2008
Eurozone inflation has come down from its record peak of 10.6 per cent in October – to 10.1 per cent in November – and the ECB has slightly scaled back the pace of rate hikes amid hopes that the battle against it may have reached a turning point.
But rate-setters have also been keen to stress their continued commitment to defeating the inflation scourge with further increases over coming months.
Elsewhere, stock markets in Europe shrugged off the prospect of more ECB rate rises as they climbed in response to China’s decision to scrap Covid-19 quarantine rules for inbound travellers.
China’s move also pushed oil prices to a three-week high.
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