Bund Yields Soar to 17-Year High Amid ECB Hike Bets

Germany's 10-year Bund yield has hit its highest level in nearly 17 years at 3.55%, surpassing June 2009's mark, as investors bet on further European Central Bank rate hikes amid renewed inflation concerns.

The rise in yields comes ahead of the US Federal Reserve decision today, with markets pricing the ECB deposit rate at around 2.9% by December, up from its current 2.5%. This represents a significant increase in expectations for further tightening.

The ECB raised rates last week to combat energy-driven inflation, warning that price pressures could persist. The comments have strengthened expectations for future hikes, with markets now pricing the deposit rate at 3.4% by November 2027, implying roughly a 50% probability of a fourth move.