March 7, 2025 (EIRNS)—As the European Central Bank lowered central bank rates by a quarter-point on March 6, expectations for fiscal expansion (i.e., war debt) in the EU drove sovereign bond yields higher..
On March 5, the 10-year German bund yield surged by 30 basis points—the largest single-day rise since 1989—reaching approximately 2.84%. By March 6, the 10-year yield had risen an additional 4.6 basis points.
Over the past week, Italian and French government bond yields have experienced similar increases, The yield on Italy’s 10-year government bond rose from 3.474% on Feb. 28, to 3.923% on March 6. The yield on France’s 10-year government bond rebounded to approximately 3.2% as of March 4.
This is a harbinger of what will happen when the market will be flooded by the new European debt issues, making that debt service not easy. Goldman Sachs forecast a 50-120 basis point increase in 10-year Bund yields over the medium term.