LONDON, March 28 (Reuters) – Euro zone government bond yields continued to rise on Monday as investors continued to bet on higher policy rates to fight inflation, a move that ends the period of negative short rates in several countries in the region.
Belgian and Dutch two-year yields thus rose above zero for the first time since 2014.
Many bond yields in the euro zone have jumped by several tens of basis points since the beginning of the month, an increase of an unusual magnitude which, for example, exceeds 40 points for the German two-year, on the way to recording its largest monthly increase since 2011.
It took 6.5 points around 09:40 GMT at -0.092%, while its French equivalent rose by nearly four points to -0.058%, against -0.45% at the end of February.
“Inflation and the Russia-Ukraine conflict remain the main drivers of the fixed rate markets. Despite still high volatility, an upward trend in yields (on European government bonds) has clearly emerged over the past weeks,” UniCredit analysts said.
The speech of the European Central Bank (ECB), which suggests that it could trigger the rise in its interest rates in the coming months, and the prospect of a continuation of the tightening of the policies of other major central banks are also helping to reduce the share of negative yields on the euro zone government bond market.
Five-year funding costs for Austria, Belgium, Finland, Portugal and Slovakia thus turned positive again in February and many shorter yields have followed suit since the beginning of March. .
On the longer part of the curve, ten-year yields also continued to rise in the middle of the morning, to 0.614% (+4.4 points) for the German Bund and 1.04% for the French OAT (+ 3.7 points).
Their Italian equivalent meanwhile took more than seven points to 2.146%, the highest since April 2020. (Report Tommy Reggiori Wilkes, French version Marc Angrand, edited by Jean-Michel Bélot)