European natural gas has overtaken oil as the chief concern for bond traders
after inventories plunged, raising fears that tight supply could rekindle
inflation. European gas is near five-month highs and winter contracts are up
more than 100% YoY. German 10-year bund and UK 10-year gilt yields briefly hit
multi-decade highs. Brent crude is about 30% below the peaks seen after the
US–Iran conflict. Investors fear higher gas prices may force central banks to
tighten more aggressively than markets currently price. Gas makes up roughly 21%
of the EU energy mix and 25–35% in the UK, CG Asset Management portfolio manager
Emma Moriarty said, adding prices failed to retrace during ceasefires and have
continued to climb.
