Euro Zone Yields Reach New Highs Amid Global Energy Price Spike

Global bond markets continued their upward trend on Tuesday, with yields hitting multi-year highs in the euro zone. The benchmark 10-year yield for Germany rose to 3.34%, its highest level since 2011, while super-long 30-year yields reached 3.83%. The sharp increase is largely driven by global energy costs, which have surged due to the Iran conflict, and subsequent central bank interest rate hikes.

The bond market is also facing pressure from a wave of new issuances as big tech companies aggressively raise funds for artificial intelligence projects, competing with government bonds for investor attention. As major economies struggle with high debt loads, investors are becoming increasingly cautious about the sustainability of these debts. Japan's 10-year yield hit 3% on Tuesday for the first time in 30 years.

The focus is now on flash inflation data for August in Europe, which is expected to be released at 0900 GMT. National data from several major economies suggests that the euro zone-wide figure may offer some relief, as it shows a less-than-expected increase in German inflation due to higher energy prices.