European Bond Selloff Deepens as Traders Boost Bets on ECB Hike

European bonds extended their selloff as turmoil in the Middle East drove up energy prices and a senior central banker warned that a prolonged conflict could bring stagflation to the euro zone.

The prospect of a fresh bout of inflation has prompted traders to price a more than 60% chance of an interest-rate hike by the European Central Bank this year. As recently as Friday, they saw 40% odds of a cut. UK yields hit their highest since December.