Reply To: ECB Raises Key Rates 50 bps vs 25 bps Expected Approves Transmission Protection Instrument

Helmholtz Watson

European bond yields sharply higher after ECB’s June meeting, with the yield on the 10-year Bund rising to 1.45% and its French counterpart surpassing 2%, both at 8-year highs.

Projections of higher borrowing costs led to even more aggressive bond sell-offs for states with higher debt, with the Italian 10-year BTP jumping 25bps to 3.7%, enough to widen the closely-watched spread with its German counterpart to over levels not seen since May of 2020.

Italian 10 year yields are up 17.9 basis points today and 260 basis points since December. Borrowing at 3.6% for Italy’s government rather than 1% is an enormous difference in total costs.

Greece 4.15% on new 10-year borrowing, up 16.3 bps today.

German yields have moved up as well but the spreads are widening. Today German 10s are up 5.2 bps.