December 1, 2016 / 7:35 AM / in a year

German Bund yields hit 1-week high as oil-price surge lifts inflation expectations

LONDON, Dec 1 (Reuters) - Germany’s benchmark Bund yield rose to a one-week high on Thursday, after the first output cut by major oil producers since 2008 sent oil prices surging and boosted expectations of higher inflation.

Oil prices rose as much as 13 percent after the Organization of the Petroleum Exporting Countries and Russia on Wednesday agreed a deal to reduce output to drain a global supply glut.

Higher inflation erodes the value of bonds and the prospect of higher oil prices comes at a time when markets are reassessing the outlook for inflation and growth following the election of Donald Trump as next U.S. President.

Germany’s 10-year government bond yield rose to around 0.30 percent in early trade, its highest level in a week. Across the euro zone, bond yields were 1-3 bps higher. (Reporting by Dhara Ranasinghe)

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