German Bond Yields Hit 15-Year High as Oil Spikes Before ECB

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessGerman Bond Yields Hit 15-Year High as Oil Spikes Before ECBGerman bond yields rose to the highest level since 2011 as surging energy prices and mounting inflation expectations fueled bets on interest-rate hikes ahead of the European Central Bank’s decision later Thursday.Author of the article:Anna Boyne and James Hirai You can save this article by registering for free here. Or sign-in if you have an account.2rkt7]9h]q7aox523]n1i([h_media_dl_1.png Bloomberg(Bloomberg) — German bond yields rose to the highest level since 2011 as surging energy prices and mounting inflation expectations fueled bets on interest-rate hikes ahead of the European Central Bank’s decision later Thursday. 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In the US, longer-dated peers are raising alarm bells following their longest run above 5% since 2007 amid signs that inflation will prove sticky. Traders are pricing almost two quarter-point hikes by the ECB by year-end while swaps imply a 75% chance that the Federal Reserve raises interest rates twice this year. Despite the jump in crude prices, the ECB will probably keep its deposit rate on hold at 2.25% on Thursday, buying time to assess the fallout of the renewed fighting between the US and Iran. At the same time, a “surprise hike cannot be fully ruled out,” said Francesco Pesole, a strategist at ING Groep NV.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“The re-escalation in the Middle East and European gas prices rising faster than oil prices should keep hawkish voices dominant in the governing council,” Pesole said. Brent crude is approaching $100 a barrel and European gas prices closed at the highest since 2023 this week as the conflict between the US and Iran escalated this month. What Bloomberg strategists say…European and UK rates have largely reverted to trading with crude. Correlation, of course, is not the same as beta. Front-end yields have proved relatively sticky as oil prices have eased, meaning the magnitude of moves has been smaller than during May’s rally. Even so, if oil continues to climb, the message from the correlations is clear: higher crude is once again a headwind for both bonds and equities.— Skylar Montgomery Koning, macro strategist. Click here for the analysis.The increased tensions have prompted warnings from policymakers.“The development of energy prices is a decisive factor in determining the future inflation outlook,” said the ECB’s Joachim Nagel in a statement last week. “Monetary policy will maintain its vigilant stance.”BlackRock Says Elevated Yields Offer Bond Investors a CushionUK bonds have also come under pressure from the recent surge in oil prices, leaving 10-year yields at 5.07%, just below an 18-year peak reached in May. Traders are also betting the Bank of England will raise the benchmark rate twice to 4.25% by year end and a third time to 4.5% by the middle of next year. This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.