Their ﬁnancing conditions normally respond to changes in interest rates at upstream stages of the transmission process only if those changes are of a more persistent nature. Euro area government bonds saw yields increase somewhat recently, with the yield on Bunds with a remaining maturity of ten years climbing by 28 basis points between mid-January and the end of February.
This was driven in large part by the uptick in US nominal interest rates, which spilled over into the euro area on account of the international linkages between interest rates. A model analysis by the Bundesbank found that this was the case, identifying that the key factor driving the upswing in Bund yields was an improvement in the economic outlook in the United States.