German yields touch 15-year high, Fed's Warsh in focus
TLT•ECB rate expectations and German bond yields
German two-year bond yields DE2YT=RR, which are sensitive to changes in ECB rate expectations, rose 2.5 basis points to 2.873%. Bond yields move inversely to prices.
Traders were pricing the European Central Bank's deposit rate at 2.80% by March next year, up from the current 2.25%. By late 2027, market pricing implies a roughly 60% probability of an ECB hike to 3%.
Fiscal worries weigh on French and German debt markets
Germany's 10-year bond yield DE10YT=RR was little changed on the day at 3.25%. It earlier touched a 15-year high at 3.2858%, as bonds have come under pressure this week on worries about fiscal sustainability.
The French spread DE10FR10=RR was at 84.5 bps after hitting 86.60 bps on Monday, its highest since November 2024, as France faces a particularly perilous annual budget battle in the coming months.
