It’s been a tough week for European fixed income investors as long-dated government bonds across Europe were thoroughly shaken. German 10-year bund yields jumped from 0.1% to over 0.6% in just one week. As shown in the chart, the abrupt sell-off in German bunds has disturbed a long-running rally in European sovereign bond market. So what has triggered the rush for the exit? Analysts are touting a series of explanations including a reassessment of inflation risk by investors, liquidity concerns as well as bearish comments made by high profile bond investors, Ultimately, with a list this long, it is likely to be a cocktail of several reasons that have caused such a reversal for European fixed income market.
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