Castle Securities said that energy shocks and central bank tightening policies are driving up European bond yields, but these factors may eventually limit further increases in yield by weakening the European economy. After the ECB raised interest rates last week on the grounds of rising inflation risks, European and British bonds became the most affected variety in the global bond market sell-off. Europe's dependence on imported energy prompted traders to prepare for further interest rate hikes by the central bank. However, Nohshad Shah, head of EMEA fixed income sales at Castle Securities, said that a possible impact on economic growth may limit the room for further increases in interest rates. Rising energy costs and concerns about inflation are also driving up US Treasury yields, but Castle Securities believes that there is still more room for US interest rates to rise. Shah said the US has a large oil and gas industry, so it is less vulnerable to rising energy costs. The AI investment boom has also provided enough buffer for the US economy to withstand higher interest rates for a longer period of time. He added that this differentiation may eventually be reflected in lower forward interest rates in the middle of the European yield curve than in the US.

Castle Securities said that energy shocks and central bank tightening policies are driving up European bond yields, but these factors may eventually limit further increases in yield by weakening the European economy. After the ECB raised interest rates last week on the grounds of rising inflation risks, European and British bonds became the most affected variety in the global bond market sell-off. Europe's dependence on imported energy prompted traders to prepare for further interest rate hikes by the central bank. However, Nohshad Shah, head of EMEA fixed income sales at Castle Securities, said that a possible impact on economic growth may limit the room for further increases in interest rates. Rising energy costs and concerns about inflation are also driving up US Treasury yields, but Castle Securities believes that there is still more room for US interest rates to rise. Shah said the US has a large oil and gas industry, so it is less vulnerable to rising energy costs. The AI investment boom has also provided enough buffer for the US economy to withstand higher interest rates for a longer period of time. He added that this differentiation may eventually be reflected in lower forward interest rates in the middle of the European yield curve than in the US.