Bund Yields Rise as Rate-Hike Bets Strengthen
Germany’s 10-year Bund yield climbed back above 3.5%, returning to levels not seen since mid-2009, as oil prices rebounded amid uncertainty surrounding US-Iran talks and investors assessed stronger-than-expected PMI data. Eurozone private-sector activity expanded in September at its fastest pace in almost three-and-a-half years, reinforcing expectations that the European Central Bank could raise interest rates further this year. ECB official Joachim Nagel said Tuesday that oil prices were becoming an increasingly important factor in monetary-policy decisions and left the door open to further rate hikes. Also, Chief Economist Philip Lane warned that another surge in energy prices could keep eurozone inflation elevated for longer than expected. In the US, investors increased bets on further Federal Reserve rate hikes following a series of hawkish comments from policymakers and stronger-than-expected PMI data.
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14, touching a fresh near two-month low as the dollar strengthened following stronger-than-expected US PMI data and a series of hawkish remarks from Federal Reserve policymakers, reinforcing expectations of further monetary tightening. A rebound in oil prices, amid persistent uncertainty surrounding US-Iran talks, also weighed on risk-sensitive assets. Meanwhile, investors digested stronger-than-expected PMI data showing that eurozone private-sector activity expanded in September at its fastest pace in almost three-and-a-half years, strengthening expectations that the ECB could raise interest rates further this year.
ECB official Joachim Nagel said Tuesday that oil prices were becoming an increasingly important factor in monetary-policy decisions and left the door open to further rate hikes. Chief Economist Philip Lane, meanwhile, warned that another surge in energy prices could keep eurozone inflation elevated for longer than expected.