German 10-year Bund yield hits 1%; first time since 2014

German Bund yields hit 1 percent for the first time since September 2014, as investors digest a generally stronger tone in European economic data.

A perception that inflation is likely to pick up in the months ahead has prompted market participants to reassess their outlook for ultra-low government bond yields in Europe.

The benchmark 10-year Bund yield , which moves in the opposite direction to the price, pushed above the 1 percent mark in early European trade and last stood at 1.015 percent.

"Now that we're at 1 percent, I would not try to stand in the way of the momentum, but the market is overshooting," Christoph Rieger, head of rate and credit research at Commerzbank, told CNBC.

Bund yields have risen sharply this month – it is currently more than double the level it traded at the start of the month.

It is also almost 100 basis points above a record low of 0.05 percent hit in April after the European Central Bank launched a hefty bond-buying program to stump up the region's economy.

The renewed selling in European government bond markets helped push the 10-year Treasury yield to a new 8-month peak at around 2.467 percent.

In contrast, the euro moved higher on the rise in European debt yields. It was last trading at $1.1365, up 0.75 percent on the day.