Euro Zone Yields Rise Amid Fed Decision and Oil Price Surge

European bond yields rose on Thursday following the Federal Reserve's decision to hold interest rates. The move was partly driven by a jump in US market rates and an increase in oil prices due to the widening of the US-Iran conflict.

The 30-year US Treasury yield climbed to a 19-year high overnight, and analysts said this reflected traders' skepticism about the Fed's commitment to reducing price pressures. Germany's 30-year bond yield rose by 5 basis points to 3.678%, while the benchmark 10-year German bond yield increased by 2 basis points to 3.178%.

Commerzbank rates strategist Erik Liem noted that central banks may be able to anchor short-term interest rates, but the long end of the market remains in the hands of traders. The rise in oil prices is also contributing to upward pressure on bond yields, as traders factor in the possibility of stronger inflation.

The euro zone economy grew 0.4% in the second quarter, beating expectations, which also contributed to a slight increase in European bond yields. However, shorter-dated European bond yields slipped, causing yield curves to steepen.