Germany's 10-year Bund yield touched 3.31% intraday on Aug. 31, the highest
since 2011 and roughly 20 bps below the 2011 peak of about 3.49%. August CPI
rose to 2.9% YoY, driven by a 10.5% jump in energy while core inflation eased to
2.4%, suggesting recent pressure is energy-led. The Bund selloff has been
amplified by higher oil, a global long-end bond selloff, and expanded German
infrastructure and defense spending with larger planned issuance. Sustained
higher yields would raise government and corporate funding costs and lift equity
discount rates; even if energy inflation fades, increased sovereign supply and a
higher term premium could prevent a return to zero or negative rates.
