ECB under Pressure as Energy Prices Surge

The US Treasury curve steepened last week as yields declined at the front end by almost 8 bps. The 30-yr bond hit a new 15-year high, with both intraday and closing prices reaching record levels. Brent crude oil prices retreated slightly from $106.6 to $104.3 on Friday's close, but have since bounced back up to $107.5. The energy price shock has sparked concerns about inflation, leading some central banks to consider tightening monetary policy.

ECB President Lagarde is set to address the European Parliament today, amid rising energy prices and a growing likelihood of higher interest rates in the eurozone. Since the ECB's last policy meeting, energy prices have surged, with the combined price curve for gas and oil now matching the bank's adverse scenario.

The Czech Republic has received a positive outlook on its AA- credit rating from S&P, reflecting the country's resilient economy and strong external balance sheet. The agency expects the country's net government debt to remain below 40% of GDP by 2029, despite a looser fiscal policy. Meanwhile, Bulgaria's BBB+ credit rating has also been upgraded, with Fitch citing the formation of a single-party majority government as a key factor in supporting growth and structural reform.