Euro bond yields hit worst weekly selling since March amid inflation fears
European government bond prices fell significantly as high energy prices pressure central banks to combat inflation, with US and Japanese central bankers also set to adjust policies next week.
Government bonds in the Eurozone experienced their worst weekly sell-off since March on Friday. Prices dropped sharply due to global market anxiety over rising energy costs, which force central banks to act quickly against inflation. The European Central Bank raised rates by a quarter percentage point on Thursday and increased its inflation forecast while lowering economic growth expectations.
In the United States, major stock indices climbed on Friday despite data showing consumer price inflation accelerated to 0.4 percent in August. Year-over-year, inflation remained steady at 3.4 percent for the month. Tim Salsbury, partner at Thymes Trading, described the figures as stubborn and noted they align with expectations while potentially disappointing both bullish and bearish investors.
These developments suggest uncertainty regarding future interest rate hikes globally. The US Federal Reserve is expected to raise rates next week following strong inflation data from America. Similarly, Japan held a policy meeting next week with broad expectations of increasing borrowing costs. Consequently, yields in the G7 nations posted their highest weekly rise since the war began in Iran.
