German 2-year yields hit highest in almost two months on inflation fears
TLT•Rate expectations and longer-dated bonds
Germany’s 2-year yields <DE2YT=RR>, which are more sensitive to expectations for policy rates, rose 2.5 basis points (bps) to 2.7489%, their highest since May 19.
Money markets implied an ECB deposit rate at 2.70% by December EURESTECBM5X6=ICAP, from the current 2.25%. They also fully priced a rate hike in September.
Germany’s 10-year government bond yield <DE10YT=RR>, the euro area’s benchmark, was up 0.5 bps at 3.08%.
German 2-year yield rises on inflation concerns
Germany’s policy-sensitive two-year bond yield hit its highest in almost two months on Tuesday, as the Middle East conflict stoked fears that higher energy prices could boost inflation and interest rates.
The U.S. military carried out a third consecutive night of strikes against Iran on Monday, after President Donald Trump reinstated a blockade of Iranian shipping and proposed charging a 20% fee to guard the Strait of Hormuz.
