German 10-year bond yield stays at 15-year high amid global bond rout

LONDON, May 18 (Reuters) - Euro zone bonds ​yields ⁠rose on Monday amid a broader global ​bond selloff, with investors worried that higher energy prices amid the ongoing Middle East conflict could fuel inflation ​and ‌prompt further interest rate hikes.

The yield on the German 10-year bond, the benchmark for the euro zone, ⁠rose 2.5 bps to 3.1791% - touching a fresh 15-year ⁠high.

On Friday, the yield had risen ​as much as 8.5 bps to its highest level since May 2011.

Bonds from Tokyo to New York extended losses on Monday as investors grew increasingly jittery about inflation, with a deadlock ​in ‌the Iran war dragging on.

Italian 10-year yields meanwhile rose 3.4 bps to 3.9771%, earlier hitting their highest level in six weeks.

European Central Bank head Christine Lagarde, asked on Monday if she was worried by the bond selloff, replied to reporters: "I always worry, that's ​my job!”

Moves on shorter-dated bond yields were more muted, with Germany's 2-year bond yield ‌flat at 2.7408% while Italy's 2-year yield rose 1.3 bps to 2.9557

"Inflation and deficit concerns have been in the background for a ‌while. UK was probably the catalyst for bringing these concerns to the fore," wrote Mohit Kumar, chief economist Europe at Jefferies.

UK 10-year gilt yields fell 2.3 bps on Monday, ​having fallen on Friday by their biggest daily slump since April 2025 amid rising political uncertainty as British ‌Prime Minister Keir Starmer comes under intense pressure to quit.

But the Iran war remains the main focus for markets on Monday, said Olle Holmgren, strategist at SEB Research, who added that ⁠he will ⁠be closely watching PMIs due out of the Euro Zone ‌and the UK later this week.

"The impact on growth is interesting, but it will also be interesting ​to see what happens ​to both input and output prices - especially output prices ‌where you saw a relatively large increase in Germany in April," he said.

UK PMIs for April will hit screens on May 20 while Euro Zone PMIs are due on May 20. (Reporting by Lucy Raitano; Editing by Andrew Cawthorne)