German 10-year Bund yields held around 3.25%, close to their highest level since March 2011, as renewed August inflation pressures in France and Spain kept investors focused on persistent price growth despite a recent decline in oil prices. France’s EU-harmonized inflation rose to 2.7% year on year from 2.4% in July, matching the flash estimate and driven mainly by faster services and manufactured-goods inflation, while Spain’s annual inflation increased to 4.3% from 3.6%, its highest level since February 2023. The data reinforced expectations that the European Central Bank could resume raising interest rates at its September meeting, even though it has reduced its deposit rate twice this year and has said incoming data will guide subsequent decisions. Markets price the ECB deposit rate at 2.80% by March next year, up from 2.25% currently, and around 2.90% by late 2027, implying roughly a 60% chance of a move to 3%. Recent ECB minutes indicated another increase was likely necessary, while Reuters reported policymakers are prepared to hike in September to contain fallout from the Iran war but remain reluctant to signal further tightening beyond that meeting. In the United States, Federal Reserve Chair Kevin Warsh warned that inflation has not meaningfully slowed and that clearer evidence of easing price pressures is needed, otherwise the Fed still has “work to do.”