Europe’s bonds slid after the European Central Bank said it would remove a cap on how much interest government deposits can earn as it lifted rates above 0% for the first time in a decade.
The ECB said that it would temporarily remove a 0% cap for remunerating government deposits. That reduces the incentive to shift billions of euros of public money from cash into short-term debt, driving a selloff that took the yield on two-year German bonds up 23 basis points to 1.33%, its second biggest jump since 2011.
