Euro Zone Bond Yields Rise Amid Global Sanctions and Inflation Concerns

Euro zone government bond yields climbed on Thursday, undeterred by U.S. President Donald Trump's latest sanctions on Russia and potential trade restrictions on China. The sanctions hit Russian oil companies Lukoil and Rosneft, reflecting Trump's frustration over the ongoing conflict in Ukraine.

As European Union nations approved their 19th sanctions package against Russia, the Trump administration considered escalating its trade war with China. Plans may include restricting software exports to counter China's rare earth export limitations. Meanwhile, financial markets are monitoring the impending U.S. consumer price index report.

In the bond market, Germany's 10-year yield, a euro zone benchmark, rose to 2.57%. Italian bonds followed suit, narrowing the yield gap between the two countries to its slimmest margin since April 2010. Despite minor changes, Germany's two-year yield remained at 1.92%, closely tied to ECB rate expectations.