Eurozone Bonds Face Weakest Month in Years as Borrowing Costs Rise

Eurozone
Eurozone

Brussels: Eurozone government bonds are heading toward one of their weakest monthly performances in a decade, pushing borrowing costs in several member states to multi-year highs amid investor concerns over the economic impact of Middle East tensions.

Italy’s 10-year bond yield rose to 4.14 percent, its highest level since mid-2024, before easing slightly to 4.08 percent. The yield remains significantly higher than at the start of the month, reflecting continued pressure in bond markets.

French 10-year yields approached 3.9 percent, their highest since 2009, while Spanish yields climbed to around 3.7 percent, marking their highest level since late 2023.

The rise in yields comes as markets anticipate further monetary tightening by the European Central Bank (ECB) to contain inflation driven by higher energy prices.

Analysts noted that concerns over slower economic growth, rising inflation, and increased government spending are weighing on investor sentiment.

ECB Executive Board member Isabel Schnabel said inflation risks have re-emerged, adding that the bank will continue to assess economic data before taking further policy steps.

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