Australia’s bond rates soared to their highest levels in two years as traders advanced their bets that the Reserve Bank of Australia will be forced to lift rates ahead of the newly hawkish European Central Bank.

European bond yields pushed higher on speculation it will abandon its fiercely dovish bias this year. Optimism is rising that the pace of global growth will hold, despite a surge in omicron cases, with central banks marching in a more hawkish direction.

Addressing the European Parliament on Monday, ECB president Christine Lagarde flagged inflationary risks and said there would be no rate increase before bond buying had ended. She also predicted the eurozone economy would accelerate strongly this year.