Eurozone bond yields hit multi-year highs at 3.40% ahead of ECB meeting
German 10-year bond yields reached a peak since April 2011 as traders anticipated two interest rate increases in 2026.
Eurozone government bond yields surged to multi-year record levels before the European Central Bank scheduled its policy decision. The German 10-year yield specifically climbed 4 basis points to reach 3.40%, a figure not seen since April 2011. Financial operators are pricing in two interest rate hikes for 2026 and expect rates to stand at 3.1% through the end of 2027. This market reaction follows military activity involving merchant ships in the Persian and Oman Guls, which disrupted energy supply chains. Oil prices exceeded US$100 while natural gas reached a three-and-a-half-year high. Refining costs have risen sharply since late June due to these geopolitical tensions. Evelyne Gomez Liechti, a strategist at Mizuho, noted that high fuel prices, food inflation from droughts, and persistent risks to gas supply are driving market risk premiums. Traders believe the ECB will tighten monetary policy while relying on incoming data.
