Fed Rate Hike Sends Global Bond Markets into a Stir
Global bond markets have reacted to the Federal Reserve's decision to raise interest rates by 25 basis points, its first hike in three years. The Fed now has a benchmark overnight interest rate of 3.75%-4%, with a majority of policymakers expecting at least one more increase by the end of the year.
The move has had a slight impact on eurozone bond yields, with Germany's 10-year government bond yield remaining just below its 17-year high of 3.5723% reached on Tuesday. However, the two-year German yield rose 1.5 basis points to 3.22%, showing a greater sensitivity to expectations for monetary policy.
Energy prices are also in focus, with Brent crude futures trading above $104 a barrel on Thursday. This has raised concerns that the European Central Bank may need to raise interest rates again, although the outlook is dependent on oil price trends.