(Bloomberg) -- European government bonds fell, pushing two-year yields to a five-year high, on speculation the European Central Bank will this week signal an increase in interest rates in June to head off inflation.
Two-year bund yields have risen 32 basis points since the ECB raised borrowing costs in March as traders boosted bets on two more increases this year. Policy makers may hold rates at the May 10 meeting and flag a move next month. President Jean-Claude Trichet has said he's comfortable with investors' expectations the ECB will lift rates a quarter-point to 4 percent in June, while other policy makers have warned of inflation risks.
Read more at Bloomberg Bonds News
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