Germany’s 10-Year Bund Yield Nears 15-Year High

Germany’s 10-year Bund yield climbed to 3%, nearing the highest level since July 2011, after the European Central Bank held rates as expected but adopted a more hawkish stance. The ECB reaffirmed its commitment to anchoring inflation at 2% in the medium term, warning that the Middle East war has heightened uncertainty, lifting inflation risks while weighing on growth. The central bank raised its 2026 inflation forecast and cut growth projections, citing the war’s impact on commodity prices, real incomes, and confidence. Money markets now price in 60 basis points of ECB tightening this year, equivalent to at least two quarter-point rate hikes.

Germany 10Y Bond Yield rose above 3, according to over-the-counter interbank yield quotes for this government bond maturity.

Germany’s 10-year Bund yield rose to 2.97%, nearing last week’s two-year peak of 2.99%, as investors ramped up expectations for ECB rate hikes ahead of today’s policy decision. Hopes for rate cuts have evaporated amid the US-Israeli conflict with Iran, which has driven energy prices sharply higher and reignited inflation concerns. A 25% spike in European gas prices, after attacks on Qatar’s LNG facilities, and Brent crude at $117/barrel have intensified inflation risks for the Eurozone, pushing markets to price in over 55 basis points of ECB tightening by year-end, equivalent to at least two quarter-point hikes. The first hike is now fully priced in by June, a stark shift from pre-war expectations of a potential rate cut.