Eurozone Bond Yields Surge Amid Inflation Concerns
Eurozone government bond yields have reached new highs, driven by persistent service inflation and a sell-off in UK gilts. With inflation climbing due to high energy costs, concerns are mounting over fiscal challenges. The market response includes rising inflation expectations and increased competition for global bond demand.

The euro area's government bond yields soared to fresh multi-month highs on Thursday, driven by persistent service inflation and a keen eye on UK gilts following a two-day selloff.
The UK 10-year gilt yield increased by 4 basis points to 4.84%, following an earlier leap of 11.5 basis points. Inflation among the 20 euro-sharing nations rose to 2.4% last month, up from 2.2% in November, fuelled by costly energy and sticky service prices. A European Central Bank survey indicated a rise in inflation expectations.
Germany's 10-year yield rose by 1.5 basis points to 2.54%, marking its highest point since mid-July. Citi attributes recent gilt fluctuations to the fiscal policies unveiled in the October 30 Budget, suggesting a global competition for bond demand during the January supply glut is influencing yields.
(With inputs from agencies.)
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