STAGFLATION: A NEW CHALLENGE FOR THE EURO ZONE 3/3

European bond markets transitioned from a flattening yield curve to a sharp spike in yields within mere sessions. The benchmark 10-year German Bund breached the 3% psychological threshold, while the French OAT surged toward 3.8%, levels not seen in years. This mass sell-off reflects a total reconfiguration of inflation expectations, accompanied by widening spreads as investors begin to re-price the varying fiscal vulnerabilities of member states in a high-rate environment.