Eurozone Bond Yields Soar Amidst ECB Rate Hike Anticipation

The Eurozone government bond yields are skyrocketing as investors anticipate the European Central Bank's (ECB) upcoming meeting and potential rate hikes. Traders have priced in two rate hikes by 2026, with expectations of a 3% deposit rate by the end of 2027.

The ECB is expected to continue tightening its policy despite ongoing geopolitical issues. Brent crude oil prices are nearing $100, while natural gas prices have set a fresh high. The crack spread has widened due to increased refinery costs, pushing inflation upwards.

Germans' 10-year bond yield has seen an increase of 2 basis points to 3.38%, the highest since April 2011. German two-year bond yields rose to 3.0% after climbing to 3.0115% last week.