Europe Takes the Baton in Global Bond Selloff as ECB Bets Weigh
- U.S. Treasury notes outperformed German peers Wednesday
- Rising inflation concerns have driven global bond rates higher
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The great bond selloff of 2022 was driven Wednesday by short-dated notes in Europe as traders bet hotter-than-expected inflation will force the European Central Bank to end its era of negative rates. Treasuries flipped between gains and losses on the day.
German two-year yields, among the most sensitive to changes in policy, briefly rose above zero for the first time since 2014 after data showed Spanish inflation surged at the fastest rate in almost four decades. Traders brought forward bets for monetary tightening, wagering earlier on Wednesday the ECB will raise its deposit rate to zero in October, compared with December previously.