European bond yields surge as German 10-year Bund hits 3.3%, highest since 2011

  • European bond yields surged to fresh multi-year highs on August’s final trading session.
  • German 10-year Bund yields reached 3.3%, their highest level since May 2011.
  • Markets priced roughly 80% odds of a second ECB hike by December, from 2.25%.

European bond yields reached fresh multi-year highs on the final trading session of August, led by Germany’s 10-year Bund at 3.3%, its highest level since May 2011. Higher oil prices, following reported U.S. and Iranian attacks around the Strait of Hormuz, and a more hawkish Federal Reserve outlook reinforced expectations for tighter monetary policy. Markets are pricing the European Central Bank’s deposit rate at about 2.70% by December, implying roughly an 80% chance of a second hike after an expected move as early as September from the current 2.25%. Investors are also positioning for euro-area rates to approach 3% by late 2027, while markets assign roughly a 60% probability to a September Federal Reserve hike after Fed Chair Kevin Warsh said inflation has not slowed meaningfully and the central bank still has “work to do.”

The information on this website is generated using AI and we cannot guarantee its accuracy. Please use it as reference information only.