Borrowing costs for the German government continued their push higher on Wednesday, with the benchmark 10-year bund yield trading in positive territory for the first time in nearly three years.
Central bank policy in times of financial stress usually focuses on the bond market. The central banks buy up sovereign bonds, reducing their yields, which then lowers the cost of borrowing for the government and also lowers interest rates for all sorts of loans and mortgages.
But the bounceback from the coronavirus pandemic has seen consumer prices soar amid this easy policy. And now central banks are looking to unwind their stimulus to try to cool down inflation. The Bank of England has already hiked rates by 15 basis points. Surging energy prices have played their part in pushing inflation higher, as well as supply bottlenecks in products like semiconductors. These factors have also had a knock-on effect for Germany's GDP figures.
France Dernières Nouvelles, France Actualités
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