Germany 10Y Bond Yield Hits 17-year High

Germany’s 10-year Bund yield extended its recent rise to 3.58%, its highest level since mid-2009, as elevated oil prices and stronger economic data bolstered expectations of further monetary tightening by the European Central Bank. Brent crude rebounded above $105 a barrel as heightened Middle East tensions clouded prospects for a diplomatic resolution to the US-Iran war. Meanwhile, German business sentiment improved more than expected in September, reaching its highest level in more than three years, following stronger-than-expected PMI data released on Wednesday. Eurozone private-sector activity also expanded at its fastest pace in nearly three and a half years. Money markets are now pricing in at least one 25-basis-point ECB rate hike by year-end, with around a 40% probability of a second. In the US, investors also increased bets on further Federal Reserve rate hikes following hawkish comments from policymakers and stronger-than-expected PMI data.

Germany 10 Year Government Bond Yield increased to 3.57%, the highest since June 2009. Over the past 4 weeks, Germany 10Y Bond Yield gained 32.19 basis points, and in the last 12 months, it increased 82.30 basis points.

Germany’s 10-year Bund yield climbed back above 3.5%, returning to levels not seen since mid-2009, as oil prices rebounded amid uncertainty surrounding US-Iran talks and investors assessed stronger-than-expected PMI data. Eurozone private-sector activity expanded in September at its fastest pace in almost three-and-a-half years, reinforcing expectations that the European Central Bank could raise interest rates further this year. ECB official Joachim Nagel said Tuesday that oil prices were becoming an increasingly important factor in monetary-policy decisions and left the door open to further rate hikes. Also, Chief Economist Philip Lane warned that another surge in energy prices could keep eurozone inflation elevated for longer than expected. In the US, investors increased bets on further Federal Reserve rate hikes following a series of hawkish comments from policymakers and stronger-than-expected PMI data.