LONDON, Sept 24 (Reuters): A rise in euro zone government bond yields continued on Friday, with Germany's benchmark yield hitting its highest since early July, carrying on Thursday's sell-off after a series of hawkish signals from major central banks.
The German 10-year yield had its biggest jump since February on Thursday, after Norway's central bank became the first major central bank to tighten policy following the COVID-19 crisis and the Bank of England said that the case for higher interest rates "appeared to have strengthened."
"A week of central bank action has shown us that policymakers are ready to move towards reining in on loose monetary policies introduced during the pandemic," wrote ING analysts in a note to clients.
An expectation of tighter central bank policy usually prompts investors to sell government bonds, meaning their prices go down and yields go up.
Rabobank rates strategists said that the bond market move was led by US Treasuries, and was due to a "risk-on" mood in global markets and a rise in oil prices, as well as the Bank of England's stance.
At 1107 GMT, Germany's benchmark 10-year government bond yield was up 2 basis points at -0.241 per cent, having edged down slightly from -0.222 per cent reached in early trading.
Italy's 10-year yield was up 5 bps at 0.7773 per cent, its highest since July 8.
On Thursday, UK 2-year gilt yields had their biggest one-day jump since 2015. This surge continued in early trading on Friday, but had eased by midday, with the 2-year yield down one basis point on the day at 0.38 per cent, and the 10-year yield flat at 0.908 per cent.
The US 10-year Treasury yield crossed the 1.4 per cent level for the first time since mid-July on Thursday, then hit 1.452 per cent during Asian trading hours. At 1113 GMT, it was flat on the day at 1.4114 per cent.
"The move in US rates is coming from the belly of the curve; it's been becoming cheaper and that's a classic bearish construction," ING said.
"It's what you would expect to see happen as a curve begins to position for a future rate hike, but not an imminent one."
The US Federal Reserve had a hawkish tilt at its meeting on Wednesday, saying it would likely begin reducing its monthly bond-buying soon.
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