Eurozone government bond yields have risen strongly amid expectations that central banks will continue to raise interest rates to curb record high inflation.
German 10-year bond yields rose by 5.4 basis points to 2.089%, reaching the highest level since December 2011. The yield on France's 10-year bonds rose by 6.5 basis points to 2.673%, while the yield on Italy's 10-year bonds increased by 8.8 basis points to 4.45%. The closely watched gap between Italian and German 10-year yields rose to 236 basis points after the rightist coalition won a clear majority in Sunday's general elections. Georgia Meloni looks set to become Italy's first female prime minister at the head of the most right-wing government since World War II. Markets will watch the choice of finance minister and anticipate a government could be formed by the end of October.
Meanwhile, the yield on 2-year UK bonds rose by 47.5 basis points, to 4.468% on signals from the Ministry of Finance about the likelihood of new tax breaks in addition to those announced last week.