Europe’s bond market faces steep selloff amid rising gas prices

Europe’s government bond market is in the middle of its worst selloff in years, driven by a combination of surging natural gas prices and geopolitical risk that has traders rethinking everything they thought they knew about the ECB’s next move. Natural gas prices at the TTF hub, Europe’s benchmark, have climbed past €75 per megawatt-hour, a level the continent hasn’t seen since early 2023. The result: bond yields are spiking across the board, inflation expectations are being revised sharply upward, and the cozy consensus around rate cuts has evaporated. Yields haven’t been this high in over a decade Germany’s 10-year Bund yield has peaked at roughly 3.38% to 3.39%, its highest point since 2011. Across the English Channel, UK 10-year gilts have surged to around 5.1% to 5.29%. Those numbers haven’t appeared on a Bloomberg terminal since 2007-2008, right before everything went sideways in the global financial crisis. The selloff is hitting shorter-duration bonds with particular force, which makes sense. Short-dated debt is the most sensitive to shifts in central bank policy expectations, and those expectations have done a complete 180. Earlier in 2026, markets were positioned for a co...