European Two-Year Note Yields Hold Near Five Year High on Trichet Comments

(Bloomberg) -- European two-year debt yields held near their highest in five years after European Central Bank President Jean-Claude Trichet signaled an increase in interest rates probably next month.

Benchmark two-year yields have climbed about 30 basis points since the ECB last lifted borrowing costs in March, reflecting expectations the central bank will raise rates twice more this year to 4.25 percent. Trichet pledged ``strong vigilance'' to combat inflation, a term he used in the past to indicate a rate increase is imminent after the bank left rates unchanged today, underpinning views rates will rise in June.


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