Volatility is the 'new norm' for government bonds as interest rate uncertainty sees yields whipsaw

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European government bonds reversed course on Thursday, moving higher after plunging during the previous session, as a fragile Middle East ceasefire keeps markets on edge.

Bond traders are grappling with unusually high levels of volatility, which is clouding the outlook for interest rate policies at the Bank of England and European Central Bank.

Yields on 10-year Gilts

— the benchmark for U.K. government debt — rose more than 6 basis points to 4.775% on Thursday, after tumbling 21 basis points a day earlier. The 2-year Gilt