Borrowing costs for the German government continued their ascent on Wednesday, with the benchmark 10-year Bund yield trading in positive territory for the first time in nearly three years.

May 2019 was the last time German 10-year yields were above zero, when the European Central Bank’s accommodative policy began to push interest rates down. Negative returns meant that investors were effectively paying the German government to lend it money.

The ECB is currently behind on its normalization trajectory, compared to the Federal Reserve and the Bank of England, but soaring inflation and broader movements in the global bond market have now helped push yields higher. above zero.

Eurozone inflation hit a new high in December, raising more questions about the ECB’s monetary policy. The central bank said last month it would scale back its monthly asset purchases, but pledged to continue its unprecedented level of stimulus in 2022.

Central bank policy in times of financial stress typically focuses on the bond market. Central banks are buying up sovereign bonds, reducing their yields, which then lowers the government’s cost of borrowing and also lowers interest rates for all sorts of loans and mortgages.

But the rebound from the coronavirus pandemic has seen consumer prices soar under this easy policy. And now central banks are looking to roll back their stimulus in an attempt to calm inflation. The Bank of England has already raised rates by 15 basis points.

Commenting on the returns, James Athey, chief investment officer at Aberdeen Standard Investments, told CNBC on Wednesday that the market currently has “the bit between its teeth.”

“Bond yields are in the crosshairs everywhere. It’s not European-led at all…I don’t think we’re looking at a Eurocentric repricing here. It’s more about the usual correlation we see between markets government bonds and the big upsides we’re seeing in Treasury yields,” he said.

Soaring energy prices have played a role in pushing up inflation, as well as supply bottlenecks in products like semiconductors. These factors also had a knock-on effect on German GDP figures.

The German economy grew by 2.7% in 2021. But the statistics office said growth was still 2% lower in 2021 than in 2019, showing the economy has yet to return to pre-Covid levels.

In the second half of 2021, signs emerged that the German economy could be hit by supply chain issues. In October, the country’s leading research institutes lowered their growth forecast for 2021 to 2.4%. the German government also lowered its expectations for annual growth in 2021.

As of 8am UK time, the yield on German 10-year bonds was up 3 basis points for the session, at 0.014%.

— CNBC’s Silvia Amaro contributed to this article.