European bond markets have continued to be roiled by political uncertainty in recent days, driving a steepening in yield curves, widening spreads for troubled sovereigns, and leading to a depreciation of the euro.
Indeed, political uncertainty in Europe is also now providing a further leg-up to yields.
However, the direction of travel matters more for markets.
The widening in spreads also brings the focus back on the ECB’s role, risking a politicisation of the institution.
