Europe Bond Market Braces for Contagion Risk Amid Energy Shock

European government bond market traders are on high alert for signs of contagion after a recent selloff evoked memories of the region's debt crisis from 15 years ago. The bonds of euro-area members had largely moved in lockstep throughout much of this year, but last week saw a divergence in performance.

The main culprit behind the market turmoil has been an energy shock that has fueled inflation fears and forced the European Central Bank to hike interest rates. France was particularly affected due to budget squabbling and a contentious election which added to global headwinds.

This recent selloff has some investors recalling the 2011 debt crisis when peripheral euro-zone countries struggled with high borrowing costs. The market is now bracing for potential contagion risk, but it's worth noting that the current situation differs from the last one in several key areas.