European government bonds have fallen in line with declines in U.S. Treasuries and other global bond markets, as increasing oil prices underscore the risk of intensifying inflationary pressures.

In the German bond market, short-dated securities led the decline. The yield on the two-year note rose by 6 basis points to 2.67%, reaching its highest level since May 21, while the 30-year yield increased by 4 basis points to 3.56%, resulting in a bearish flattening of the yield curve.

In the United Kingdom, the yield on the two-year gilt climbed 5 basis points to 4.36%, and the yield on the 30-year gilt rose 6 basis points to 5.61%.

Oil prices advanced for a third consecutive session, hitting a more than one-week high, as ongoing hostilities between the U.S. and Iran diminished the likelihood of a near-term peace agreement.

Investors are awaiting government bond auctions from France and Spain scheduled for Thursday, while also monitoring speeches from European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey.

Market Snapshot

The yield on the 10-year German Bund rose 5 basis points to 3.02%.

The German Bund futures contract fell 43.00 points to 125.61.

The yield on the 10-year Italian BTP increased by 7 basis points to 3.76%.

The Italy-Germany 10-year yield spread widened by 2 basis points to 74 basis points.

The yield on the 10-year French OAT rose 6 basis points to 3.65%.

The yield on the 10-year UK gilt increased by 5 basis points to 4.91%.