European shares declined for a fifth straight session as bond yields jumped amid concerns of persistently high inflation as well as the impact of hawkish central bank policies on global growth. The Stoxx Europe 600 Index dropped 0.6 per cent, with futures on the S&P 500 down by about the same magnitude, pointing to another risk-off day on Wall Street.
“There is evidence inflation is stabilizing but the question is whether inflation has peaked or is just pausing before another leg higher,” said Michael Hewson, chief analyst at CMC Markets in London. “Rates markets are reflecting that uncertainty.” In bond markets, yields on two-year Treasuries rose to the highest since 2007 while the 30-year yield surged to the highest since 2014.
Britain has also become a point of concern, as the Bank of England was forced to expand its emergency measures to tackle what it called “fire-sale dynamics.” Ten-year U.K. government yields which had risen more than 50 basis points since Oct. 4, dropped as much as 4 basis points to 4.43 per cent.
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