Germany's Bond Yields Reach Highest Levels in Over 15 Years Amid Oil Price Surge

Germans and French long-dated government bond yields rose to their highest levels in over 15 years on Monday, as oil and natural gas prices surged. German Federal Reserve Chair Kevin Warsh signalled that rate hikes may be needed if inflation remains above target.

Investors are watching the so-called crack spread, a measure of refining margins. The ICE heating oil/Brent crack spread was last at $84.50, up from about $36 before the conflict. Even if oil prices fall on a deal to open the key Strait of Hormuz shipping route, margins are likely to stay elevated while damaged refinery capacity takes time to rebuild.

Natural gas prices rose 5% to €70.70, their highest since March. EU gas stores are 64.7% full, the lowest for this time of year in records going back to 2011 and 12.4 percentage points below last year's level.