Eurozone yields near record highs ahead of ECB rate decision

Eurozone government bond yields have risen to levels not seen in years, reflecting persistent inflation pressures and heightened expectations for further monetary tightening by the European Central Bank. The ECB raised its benchmark deposit facility rate by 25 basis points to 2.50% on October 9, 2026, though markets remain pricing in over 90% probability of another quarter-point hike before year-end. Meanwhile, U.S. Treasury yields have also surged, with the 10-Year Treasury reaching its highest level since 2023, driven by strong August inflation data and robust employment figures that bolstered expectations for another Federal Reserve rate hike at its September meeting, where a 62% chance of a 25-basis-point increase was priced in. August’s Eurozone consumer price index rose to 3.3%, with energy components climbing 14.3%, underscoring ongoing cost-push inflation risks for energy-importing economies like Germany. German yields have also hit multi-decade highs: the 2-Year Schatz rose to 3.072%, the 10-Year Bund to 3.457%, and the 30-Year Buxl to 3.911%, with the latter two approaching 2011 peaks. In parallel, U.S. Treasury yields climbed—2-Year yields reached 4.497%, 10-Year yields hit 4.909%, and 30-Year yields spiked to 5.339%, with the 30-Year Treasury marking its highest level since 2024. Brent crude prices remained above $100 a barrel, supported by escalating tensions in the Persian Gulf, adding to inflationary pressures for European economies dependent on energy imports. Upcoming economic releases, including the U.S. Consumer Price Index due Friday, will further influence market expectations for central bank action.