Bund Yield Hits Highest Level Since 2009
Germany’s 10-year Bund yield extended its recent rise to 3.58%, its highest level since mid-2009, as elevated oil prices and stronger economic data bolstered expectations of further monetary tightening by the European Central Bank. Brent crude rebounded above $105 a barrel as heightened Middle East tensions clouded prospects for a diplomatic resolution to the US-Iran war. Meanwhile, German business sentiment improved more than expected in September, reaching its highest level in more than three years, following stronger-than-expected PMI data released on Wednesday. Eurozone private-sector activity also expanded at its fastest pace in nearly three and a half years. Money markets are now pricing in at least one 25-basis-point ECB rate hike by year-end, with around a 40% probability of a second. In the US, investors also increased bets on further Federal Reserve rate hikes following hawkish comments from policymakers and stronger-than-expected PMI data.
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7%, as elevated oil prices and stronger economic data reinforced expectations of further monetary tightening by the European Central Bank. France remains under particular scrutiny as it heads towards the 2027 election with a substantial primary deficit and heightened budget risks amid a fragmented parliament. Brent crude climbed as heightened Middle East tensions clouded prospects for a diplomatic resolution to the US-Iran war. Meanwhile, data released Wednesday showed eurozone private-sector activity expanding at its fastest pace in nearly three and a half years, while French output grew for the first time in 10 months.
Money markets are now pricing in at least one 25-basis-point ECB rate hike by year-end, with around a 40% probability of a second. In the US, investors have also increased bets on further Federal Reserve rate hikes following hawkish comments from policymakers and stronger-than-expected PMI data.