European bonds are taking a beating

The picture is darkening in the fixed income world, led by a sharp rise in Italian and German sovereign debt.

Italian 10-year BTPs are up 14.1 basis points today, breaking the April highs. They’re now within striking distance of the 4% level that capped the February rise.

Over in Germany, bund yields are up 8.7 bps as well and trading at the highs.

The sentiment has bled into the US, where US 10s are up 6.4 bps. Eyes will be on the five-year tenor later with a $70 billion auction at 1 pm ET.

It’s not clear what the catalyst has been for this move. Commentary from Visa yesterday cited ‘stable consumer spending’ and today’s economic data was benign.

This article was written by Adam Button at www.forexlive.com.