Eurozone government bond yields rose yesterday as oil prices recovered and unexpected debt sales weighed on the region’s market, which had been expected to enjoy a supply-free week.
Bond yields fell early on as lower oil prices hurt prospects of inflation returning to the European Central Bank’s target anytime soon. But the recovery in crude prices later in the afternoon brought about a reversal in bond yields as well.
Some traders attributed the underperformance of the peripheral bonds to persistent doubts about the sustainability of the deal between Greece and its creditors to avert bankruptcy and stay in the eurozone.
Prime Minister Alexis Tsipras is expected to get a second package of measures through Parliament tonight with the support of pro-European opposition parties.
Meanwhile, Slovak Prime Minister Robert Fico said his country will be among the first to ask Greece to leave the eurozone if it fails to meet the conditions of further aid.
“The Greek situation is far from resolved,” Rabobank market economist Emile Cardon said.