Bund Yield Nears 15-Year High as ECB Rate Hike Looms

Germany’s 10-year Bund yield held just below 3.4%, its highest level since April 2011, as investors braced for Thursday’s European Central Bank policy meeting. Policymakers are widely expected to raise interest rates while maintaining their data-dependent approach, with the ongoing war involving Iran adding to uncertainty over the inflation outlook. Brent crude briefly reached $100 a barrel for the first time since July 24, while European natural gas prices climbed to fresh three-and-a-half-year highs as escalating tensions in the Middle East heightened concerns over energy supplies and renewed inflationary pressures. Markets are now pricing in two ECB rate hikes in 2026, with the deposit rate seen reaching 3% by late 2027. A Reuters poll published on September 3 indicated that the ECB was expected to raise rates on Thursday for a second time before bringing what would be its shortest rate-hiking cycle in 15 years to an end.

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