Bond Yields Surge as ECB Hikes Rates Again
Global bond yields rose across the board last week, with the US 10-year Treasury bond yield climbing 19 basis points to 4.97%. The UK's 10-year gilt closed at 5.35%, near its highest level in decades. Japan's 10-year bond yield also reached multi-year highs, reaching 2.99%.
The European Central Bank (ECB) delivered its third rate hike of the latest tightening cycle on Thursday, lifting its policy rate to 2.50%. ECB President Christine Lagarde declined to signal what comes next, but futures markets now price roughly a 50% chance of a follow-up rate hike in October.
Attention turns to the Fed this week, with the marquee event being Wednesday's FOMC meeting and the release of the committee's Summary of Economic Projections (SEP). Retail sales and regional business surveys are also due out, with the financial markets expecting a rate hike from the Fed. The Bank of England is expected to hold its policy rate at 3.75%, while the Bank of Japan is predicted to raise its policy rate to 1.25%.