Oil Prices Soar Above $100 as Eurozone Bond Yields Rise

Global bond markets are showing signs of recovery as oil prices rebounded above $100 per barrel, prompting Eurozone government bond yields to rise. The increase in oil prices has heightened concerns over inflation, leading investors to bet on higher interest rates.

The benchmark 10-year bond yield in Germany rose by 3 basis points to 3.481%, after dropping 7 basis points the previous session. Italy's 10-year government bond yields also climbed 4 basis points to 4.376% on Tuesday, following a decline of 10 basis points in the previous session.

Oil prices have been volatile in recent days, falling below $100 per barrel on Monday but rebounding nearly 2% to around $102 per barrel on Tuesday. The global benchmark had fallen to about $99 on Monday, its lowest level in almost two weeks, due to prospects for diplomatic discussions over the Iran war at a United Nations meeting this week and reports of a partial recovery in Saudi oil shipments.

European bond markets have been sensitive to energy costs due to their reliance on imported fuel. The rise in Eurozone bond yields has been driven by expectations that the Middle East energy shock could keep inflation elevated, while resilient economic growth has encouraged traders to increase bets on higher interest rates.