Euro zone yields hit new multi-year highs ahead of inflation data

Euro zone government bond yields nudged up ​to fresh multi-year highs on Tuesday, ​as Europe joined a global ‌bond selloff, ​and ahead of key regional inflation data. Germany's 10-year yield, the benchmark for the euro zone, rose just over 1 basis ‌point to 3.34%, a new 15-year high. It rose 5 bps on Monday.

Super-long 30-year yields rose nearly 2 bps to 3.83%, also their highest since 2011. Yields have been spiking from ‌Tokyo and Sydney to New York and London as the Iran war stokes energy ‌costs globally, threatening broader price rises and bringing on more central bank interest rate hikes.

The bond market is also under pressure from a deluge of issuance as big tech companies aggressively raise money to fund the ⁠AI boom, ​competing with government ⁠bonds for investor cash at a time when nearly all major economies are carrying high debt loads. Japan's 10-year ⁠yield hit 3% on Tuesday for the first time in 30 years.

In Europe, the focus is ​on flash inflation data for August due at 0900 GMT. National data from many ⁠major economies over the last few days suggest the euro-zone-wide data could offer a modicum of relief. German inflation ⁠rose ​in August on higher energy prices due to the Iran conflict, but the increase was less than expected and core inflation stabilised, data showed on Monday.

That is keeping ⁠ECB-sensitive shorter-dated bonds slightly in check. Germany's 2-year yield was flat on the day at ⁠2.92%, only a two-year ⁠high. But longer-dated bonds were under pressure across the region. French 10-year and 30-year yields each rose 2 bps to 4.19% and 4.96% ‌respectively, both ‌their highest since 2008.