Bond yields rise is bad news for all

While German bond yields remain very low, their sharp rise from near-zero in mid-April is effectively a tightening of monetary conditions just as the European Central Bank is trying to loosen them through its bond purchase programme, which aims to revive the euroland economy and pull it further away from the risk of deflation.

It’s one of the interesting developments in financial markets in the past few weeks — the sharp rise in government bond yields, particularly in the eurozone.

Having had their worst week in the history of the euro, in the first week of June, German 10-year bunds saw yields rising above 1% in recent days, after the ECB dismissed a six-week sell-off that could blunt its trillion-euro economic stimulus programme.