BTPs: spread rises to 115 points at the close; 10-year yield jumps to 4.63 per cent

(Il Sole 24 Ore Radiocor) - A session characterised by high volatility on the European bond markets, which, following a spike in yields midway through the session, partially recovered ground as the market neared the close. Tensions in the energy market are driving the yield curve upwards, with the crisis in the Middle East linked to the conflict between Iran and the US causing crude oil prices to soar. Expectations of a surge in inflation are fuelling fears of further short-term rate rises by the Fed and the ECB, triggering a flight to quality that favours Core European bonds at the expense of peripheral Eurozone countries, with France and Italia among the countries hardest hit by the sell-off. At the close of trading, the yield spread between the benchmark 10-year BTP and the German bond of the same maturity stood at 115 basis points, up 10 basis points from the previous session’s 105 basis points. The yield on the benchmark 10-year BTp also rose sharply, closing at 4.63 per cent, up from 4.52 per cent at the previous day’s close. The yield on the German Bund closed steady at 3.48%, whilst the French 10-year OAT ended higher at 4.86% (4.74% the previous day). The spread between the OaT and the Bund also widened, closing at 139 basis points (127 the previous day).

Cel