Euro Zone Bond Yields Reach Multi-Year Highs Amid Inflation Fears

The euro zone government bonds selloff continued on Wednesday, with yields rising to new multi-year highs for a second day. The main concerns are inflation and high public spending, which are putting pressure on sovereign debt markets.

Oil prices rose again on Wednesday, adding to the upward pressure on energy prices. Brent crude oil reached $92.38 a barrel, its highest since late July.

The 10-year yield of Germany's government bonds hit a fresh 15-year high of 3.275%, while French 10-year yields rose to their highest since 2008 above 4.13%. Italian 10-year yields also rose to their highest since March above 4.1%.

Michael Weidner, co-head of global fixed income at Lazard Asset Management, said investors are concerned about debt sustainability and the Iran war situation. He added that thinner market liquidity during the summer could be exacerbating moves in bonds.