German Bund Yields Rise at Start of Q3

Germany’s 10-year Bund yields climbed above 2.9%, rebounding from a four-month low and following US Treasury yields higher. This came after the latest JOLTS report revealed job openings at a two-year high, while analysts anticipate another strong June non-farm payrolls report, reinforcing expectations that the Federal Reserve will raise interest rates this year. In Europe, investors are focused on the ECB’s Sintra Forum and inflation updates from major economies. Today’s panel with ECB President Christine Lagarde and new Fed Chair Kevin Warsh is highly anticipated, as markets seek insights into economic assessments and policy directions. Recent inflation data in Europe showed easing price pressures, offering some relief to ECB policymakers. Additionally, investors are monitoring US-Iran peace talks in Qatar, hoping for progress toward a lasting ceasefire, though direct negotiations remain unlikely.

Germany’s 10-year Bund yields were slightly higher at 2.88% at the end of June, trading just above a four-month low. They were on track for a 5bps monthly decline and a 12bps quarterly fall, as oil prices pulled back from recent peaks after the US-Iran ceasefire reopened the Strait of Hormuz, easing inflation concerns. This shift has prompted markets to temper expectations for the extent of interest rate hikes by the ECB and Bank of England. At the same time, the Federal Reserve’s hawkish stance hinted at potential US rate increases this year. Investors also focused on the ECB’s Sintra Forum and inflation data from Europe’s major economies. The highlight was Wednesday’s panel featuring ECB President Christine Lagarde, as markets sought insights into economic assessments and policy directions. Inflation data indicated easing price pressures in Germany, France and Italy in June, while Spain’s rates stayed near two-year highs.

Germany’s 10-year Bund yields were at 2.85% at the end of June, near their lowest since early March, as oil prices remained close to $70 a barrel and as central bankers prepare for the ECB’s Sintra Forum, with a key panel on Wednesday featuring ECB President Lagarde, new Fed Chair Kevin Warsh, and Bank of England Governor Andrew Bailey. Investors will watch for clues on their economic outlook and future policy direction. Since the interim US-Iran ceasefire reopened the Strait of Hormuz, oil and inflation expectations have dropped, leading markets to reduce bets on the scale of interest rate hikes from the ECB and Bank of England. Traders will also review new inflation data from Europe’s largest economies later this week.