ECB Hikes Loom as Treasury Yields Surge and Oil Prices Soar

The European Central Bank (ECB) is set to raise interest rates for the second time in its current tightening cycle, with markets expecting a 25-basis-point increase that would lift the deposit rate to 2.50% and the main refinancing rate to 2.65%. The move comes as energy prices continue to rise, pushing European yields to multi-year highs and reinforcing expectations of a more hawkish ECB path.

The U.S. Treasury's expanded long-end buyback operation has failed to calm long-term borrowing costs, with the 30-year yield rising above 5.3%, its highest level since 2007, and the benchmark 10-year yield touching 4.865%. The Dow Jones Industrial Average fell roughly 440 points as the Treasury bid fell short of calming the long end of the curve.

Meanwhile, oil prices remain elevated due to escalating U.S.-Iran tensions and renewed concern over shipping through the Strait of Hormuz, with Brent crude rising 3.36% to $101.21 a barrel, its highest close since May, and WTI settling just above $94.00.