European government bond yields rebounded from multi-day lows on Thursday after European Central Bank Executive Board member Isabel Schnabel cautioned that additional interest rate increases may be required to bring inflation back to the ECB’s 2% medium-term target.
The German 10-year Bund yield rose to 3.226%, reversing a brief dip below 3.20% earlier in the week, while the two-year Schatz yield climbed to 2.810%. The moves followed Schnabel’s remarks in a Bloomberg interview, where she emphasized that policy tightening may still be necessary despite recent disinflation progress.
U.S. Treasury yields also advanced, with the 10-year note climbing to 4.666% after touching a two-week low on Tuesday. The 2-year yield increased to 4.230%, and the 30-year yield edged up to 5.186% following a near three-week low earlier in the week. The uptick in U.S. yields came as traders positioned ahead of a scheduled speech by Federal Reserve Governor Kevin Warsh at the Jackson Hole economic symposium in Wyoming.
On the data front, U.S. core Personal Consumption Expenditures inflation for July matched forecasts at 3.3% year-over-year, while the headline PCE index accelerated slightly to 3.7%. The figures underscore persistent price pressures despite recent easing in some components.
In Germany, the GfK/NIM consumer confidence index unexpectedly improved to -26.6 points for September, suggesting a tentative stabilization in household sentiment. The ECB’s medium-term inflation target remains 2%, and market participants are reassessing the path of policy tightening in light of Schnabel’s remarks and the mixed inflation data.
