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Bond Rout That Kicked Off 2022 Lights Fuse for Europe Volatility

  • Markets are repricing as inflation pressures central bankers
  • Bund yields threaten to turn positive for first time in years

It’s going to be an action-packed year for bond markets if the first week of 2022 is any guide.

Treasuries had their worst-ever start and German debt followed to send yields to the highest since 2019. Now they are threatening to break above 0% as traders bet European Central Bank policy makers will have to act to rein in inflation that has accelerated to record levels.