European bonds under pressure as US Treasury yields rise
European bond markets came under significant pressure after the yield on long term US Treasuries recently surged to nearly a 20 year high. Although US Treasury interventions temporarily eased pressure, European sovereign bond markets remain under strain.
On Friday, the yield on 30 year US Treasuries rose to 5.273%, having earlier hit 5.34% — the highest since 2007. Yields on major European government bonds also climbed: German 10 year bunds at around 3.25% (near 15 year highs), French yields above 4.13% (peak since 2008), and Italian yields up to 4.08%.
Analysts warn that US bond market volatility will continue to pressure Europe. Aberdeen Investments noted that US debt buybacks have limited rates, but this has not extended to other countries, pointing to further weakness in European bonds. Guy Miller of Zurich Insurance stressed that the yield trajectory is critical for all European assets.
Rising yields are already shifting investor strategies. Saxo Bank says high rates and inflation concerns weigh on tech and financial stocks. ING Group warned of insufficient currency hedging by European asset managers. Mark Dowding of BlueBay Asset Management added that slower US growth and debt concerns could trigger a sharp correction in European markets.
