Eurozone Bond Yields Rise as ECB Rate Hike Bets Grow

2026-09-11 08:57 By Joana Ferreira 1 min. read

Eurozone government bond yields continued to rise, with global debt markets heading for their worst weekly selloff since the start of the Iran war as surging energy prices fuel inflation concerns.

Germany’s 10-year Bund yield climbed above 3.5%, its highest since August 2009, while Italian yields reached their highest since late 2023 and French yields hit 18-year highs.

The European Central Bank raised rates by 25 bps on Thursday, warning that inflation could remain well above its 2% target for an extended period.

President Christine Lagarde called the hike a “no-brainer” and said the return to target, currently expected by the end of 2027, could be delayed further.

The inflation outlook has deteriorated so sharply that further monetary tightening is now considered increasingly likely, according to sources familiar with the discussions, with another rate hike potentially coming as soon as October.

Markets are now pricing three more ECB hikes by March, followed by another by June.



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Eurozone Bond Yields Rise as ECB Rate Hike Bets Grow
Eurozone government bond yields continued to rise, with global debt markets heading for their worst weekly selloff since the start of the Iran war as surging energy prices fuel inflation concerns. Germany’s 10-year Bund yield climbed above 3.5%, its highest since August 2009, while Italian yields reached their highest since late 2023 and French yields hit 18-year highs. The European Central Bank raised rates by 25 bps on Thursday, warning that inflation could remain well above its 2% target for an extended period. President Christine Lagarde called the hike a “no-brainer” and said the return to target, currently expected by the end of 2027, could be delayed further. The inflation outlook has deteriorated so sharply that further monetary tightening is now considered increasingly likely, according to sources familiar with the discussions, with another rate hike potentially coming as soon as October. Markets are now pricing three more ECB hikes by March, followed by another by June.
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Bund Yield Hits Fresh 15-Year High as ECB Rate Hike Looms
Germany’s 10-year Bund yield rose above 3.4%, touching its highest level since April 2011, as investors braced for today’s European Central Bank policy decision. Policymakers are widely expected to raise interest rates while maintaining their data-dependent approach, with the ongoing US-Iran war adding to uncertainty over the inflation outlook. Brent crude reached $100 a barrel for the first time since July 24, while European natural gas prices climbed to fresh three-and-a-half-year highs as escalating tensions in the Middle East heightened concerns over energy supplies and renewed inflationary pressures. Markets are now pricing in two ECB rate hikes in 2026, with the deposit rate seen reaching 3.1% by late 2027. A Reuters poll published on September 3 indicated that the ECB was expected to raise rates on Thursday for a second time before bringing what would be its shortest rate-hiking cycle in 15 years to an end.
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