Surge in European Bond Yields Amidst Political Tensions

European bond markets have been shaken by rising yields as political and fiscal concerns grip the continent. On Tuesday, France's 30-year government bond yields surged to their highest levels in over 16 years, fueled by the fear of government instability and fiscal imbalances. This jump comes amid talks by Prime Minister François Bayrou to prevent a government collapse.

Adding to the turbulence, France's far-right National Rally has indicated its readiness for snap elections, expecting opposition forces to vote against the minority government on September 8. As a result, France's 30-year bond yields shot up to 4.513%, their highest point since June 2009.

The situation in France is compounded by Germany's expanding investment plans and expected increases in defense spending across euro area nations. This has put additional pressure on long-term government bond yields. Notably, Germany's 10-year bond yield, which serves as the eurozone benchmark, increased by 4 basis points to 2.79%, while 30-year German bonds also touched a 14-year high at 3.41%.

(With inputs from agencies.)