Euro Zone Yields Hit Multi-Year Highs Amid Iran War Fears

The euro zone bond market has joined the global sell-off, with yields hitting multi-year highs on August 18. The rise in yields is largely driven by fading hopes for a swift end to the war in Iran, which has sent oil prices higher and fueled inflation concerns.

Fiscal stability worries in countries such as France, Japan, Britain, and the US have also contributed to the sell-off. Even recent soft data from the US has led markets to trim their expectations for rate hikes from the Federal Reserve.

The 10-year yield in Germany, a benchmark for the euro zone, reached 3.2478 per cent, its highest level since May 2011. This is despite concerns over the fiscal outlook weighing more heavily on longer-dated bonds.