Bund Yields Climb Ahead of ECB Decision

2026-07-20 06:34 By Joana Ferreira 1 min. read

Germany's 10-year Bund yield rose to 3.15%, approaching a near two-month high, as surging oil prices reinforced expectations that the European Central Bank will deliver two more rate hikes by early 2027.

The two-year Bund yield, which is more sensitive to interest rate expectations, climbed above 2.8% to its highest level since July 2024.

Brent crude rose above $90 a barrel, its highest level in over a month, as escalating US-Iran hostilities threatened oil flows through the Strait of Hormuz, fueling inflation concerns.

Money markets now price the ECB's deposit rate at 2.70% by December and 2.78% by February 2027, up from the current 2.25%, with the first hike expected as soon as September.

Attention now turns to Thursday's ECB policy meeting, where policymakers are widely expected to leave rates unchanged and adopt a wait-and-see stance following June's first rate hike in three years.



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