FX.co ★ Bund Yield Hits Highest Since 2011 Ahead of ECB Decision

Germany’s 10-year Bund yield climbed toward 3.2% on Thursday, its highest level since May 2011, as investors awaited the European Central Bank’s latest policy decision. The ECB is widely expected to leave interest rates unchanged, while signaling that a rate increase in September remains on the table.

The central bank implemented its first rate hike in three years in June and stressed that subsequent policy steps would be guided by incoming data. Since then, weaker readings on inflation, wage growth, economic activity, and inflation expectations have reduced the urgency for an immediate follow-up move.

However, a sharp rise in oil prices driven by escalating tensions in the Middle East has revived inflation concerns, bolstering expectations that the ECB will maintain a cautious stance. Money markets continue to discount at least two additional rate hikes by the end of the year, with September viewed as the most likely window for the next adjustment.