The European Central Bank is “closely monitoring” nominal government bond yields, ECB chief Christine Lagarde said on Monday, a clear sign that policymakers are becoming uncomfortable with the recent surge in yields. “Within the broad-based set of indicators that we monitor to assess whether financing conditions are still favourable, risk-free overnight indexed swap rates and sovereign yields are particularly important,” Lagarde said in a speech. “Accordingly, the ECB is closely monitoring the evolution of longer-term nominal bond yields.”