Market gyrations could threaten recovery

The sharp rise in euro-zone bond yields and further appreciation of the euro last week might look like a response to the recent improvement in the euro-zone’s economic performance. But the renewed rise in oil prices is perhaps a more likely driver, with different implications for growth.

Whatever the precise explanation for the market movements, they provide a timely warning that at least some of the forces which appear to have helped to fuel a modest recovery in the euro-zone economy over recent months could prove to be transitory.