German Bund Yields Hit 2011 High

German 10-year Bund yields edged above 3.25%, touching their highest level since March 2011, as investors remained concerned about persistent inflationary pressures despite the recent decline in oil prices. Inflation data from France and Spain showed renewed price pressures in August, reinforcing expectations that the ECB could resume raising interest rates at its September meeting. Markets now price the ECB deposit rate at 2.80% by March next year, and around 2.90% by late 2027. Recent ECB minutes suggested officials saw another rate increase as likely necessary, while Reuters reported that policymakers are prepared to hike in September to contain the economic fallout from the Iran war, though they remain reluctant to signal further tightening beyond that. In the US, Fed Chair Kevin Warsh also struck a hawkish tone, warning that inflation has not meaningfully slowed and that policymakers need clearer evidence of easing price pressures, otherwise the Fed still has “work to do.”

German 10-year Bund yields edged above 3.25%, touching their highest level since March 2011, as investors remained concerned about persistent inflation pressures despite the recent decline in oil prices. Inflation data from France and Spain showed renewed price pressures in August, strengthening expectations that the ECB could resume raising rates at its September meeting. Markets are now pricing the ECB deposit rate at 2.80% by March next year, up from 2.25% currently, and around 2.90% by late 2027, implying roughly a 60% chance of a hike to 3%. Recent ECB minutes indicated that officials saw a further rate increase as likely necessary, while Reuters reported that policymakers are prepared to raise rates in September to contain the economic fallout from the Iran war, although they remain reluctant to signal further tightening beyond that. Markets also awaited Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole for clues on the US rate outlook.

Germany 10 Year Government Bond Yield increased to 3.27%, the highest since May 2011. Over the past 4 weeks, Germany 10Y Bond Yield gained 11.75 basis points, and in the last 12 months, it increased 55.12 basis points.