Euro Zone sovereign debt yields are easing this Thursday, representing the first pause in the sell-off that has punished bond markets worldwide in recent days. Portugal's ten-year bond yield fell about four basis points to 3.698%, after hitting nine-year highs on Wednesday.
The same decompression trend is seen in Spain and Germany. Spanish rates for the same maturity gave up three basis points to 3.8076%, while German bund rates, which serve as a benchmark for the entire single currency region, fell 1.5 basis points to 3.3604%.
Recent days have been marked by strong selling pressure in global bond markets, amid investor concerns about the impact of rising oil prices on inflation. Countries with high public debt and more problematic public finances, such as France, the USA and Japan, were among the most penalized. Brent crude is near 100 dollars and WTI crude is trading above 90 dollars, with prices rising due to the military escalation in the Middle East.
The rise in energy prices led investors to revise their expectations for central banks, expecting them to be more aggressive to curb an inflationary spiral. The ECB will raise rates at next week's meeting and markets anticipate a further 25 basis point increase in December, which would bring the deposit rate to 2.75%, the highest level since March 2025.
