Germany's two‑year Schatz yield was anchored at 3.25%, close to a three‑year peak, while the benchmark 10‑year German Bund lingered at 3.544% – its highest level since 2011. The 30‑year Bund eased from recent 15‑year highs to trade around 3.897%, offering modest relief to the long‑end of the curve after days of aggressive selling.
The European Central Bank raised its deposit facility rate to 2.50% the previous week, and money markets are pricing in a high probability of another ECB tightening move before year‑end. Traders also anticipate further tightening from the Bank of Japan, which is scheduled to announce a policy shift on Friday.
In the United States, the Federal Open Market Committee is expected to raise borrowing costs by 25 basis points, with market pricing showing a 92% probability of that outcome. Fixed‑income desks are watching Chair Kevin Warsh’s post‑meeting press conference for clues on whether the hike is a one‑off insurance move against energy‑price volatility or the start of a broader tightening cycle.
Elevated crude oil prices, with Brent holding firm past $113 a barrel following pipeline strikes and Red Sea shipping disruptions, continue to underpin a risk premium in euro‑area sovereign debt, keeping yields near multi‑year peaks as investors brace for the Fed decision.
