Euro zone government bond yields held near multi-year peaks on Monday morning as traders awaited the European Central Bank's latest interest-rate decision and parsed fresh inflation data from both sides of the Atlantic.
The ECB raised its benchmark deposit facility rate by 25 basis points to 2.50%, a move aimed at combating energy-driven inflation across the bloc. Money markets subsequently priced in greater than a 90% probability that the central bank will deliver another quarter-point increase before the end of the year.
Yield movements across German sovereign debt reflected the hawkish repricing. The 2-year Schatz rose 1.9 basis points to 3.072%, holding near its highest level since 2024. The 10-year Bund climbed 0.8 basis points to 3.457%, hovering close to its highest point since 2011. The 30-year Buxl advanced 1.3 basis points to 3.911%, touching levels last seen in 2011.
The yield pressures come against a backdrop of rising consumer prices. Preliminary euro-zone CPI data showed inflation accelerating to 3.3% in August, driven largely by a 14.3% spike in energy components. Brent crude held above $100 a barrel, trading around $103.65, supported by an expanding military conflict in the Persian Gulf that continues to weigh on energy supply outlooks.
Across the Atlantic, U.S. producer-price data added further momentum to global bond-sell-off pressures. Headline U.S. PPI inflation surged to 5.4% year over year in August, according to the Bureau of Labor Statistics, topping consensus forecasts of 5.3% and accelerating from 4.8% in July.
U.S. Treasury yields responded sharply. The 2-year note jumped 2.5 basis points to 4.497%, touching its highest level of 2024. The 10-year note surged 2.7 basis points to 4.909%, marking its highest reading since 2023 and extending a winning streak to six consecutive sessions. The 30-year bond spiked 5.8 basis points to 5.339%.
Traders are now looking ahead to the Federal Reserve's September 15–16 FOMC meeting, where futures markets price in roughly a 62% probability of a 25-basis-point rate hike. Friday's U.S. Consumer Price Index release has become the next key data point for gauging whether inflation pressures will prompt the central bank to continue its tightening cycle.
