Traders stick with ECB hike bets as oil touches $100 once more
TLT•Markets keep pricing a September hike
Markets continued to price around a 95% chance of a 25 basis-point ECB rate hike in September, and a similar probability of a further more by December, in line with expectations before the ECB's decision.
ECB holds rates steady but keeps September hike in play
Traders stuck to their bets that the European Central Bank will resume rate hikes from September on Thursday as oil prices hit $100, reinforcing that policy will likely need further tightening to combat inflationary risks.
The ECB kept interest rates unchanged as expected on Thursday but held the door open to another increase in September, as a fresh jump in energy prices threatened to keep inflation well above its 2% target.
Bond yields rise, euro falls and STOXX 600 extends losses
Germany’s 2-year bond yield DE2YT=RR, which is sensitive to interest rate expectations, was last up around 2 basis points 2.86%, remaining near a two-year high it touched earlier in the day.
The 10-year yield, the benchmark for the euro area, was up similarly at 3.19%, just shy of a 15-year high it touched earlier.
The euro EUR=EBS dropped 0.3% to $1.1373, its lowest since July 1, even as traders stood pat on their rate hike bets, highlighting the bloc's energy dependency.
Europe's broad STOXX 600 share index .STOXX extended its fall and was last down 1.4%.
Oil touches $100 as energy shock supports tightening bets
Just as President Christine Lagarde spoke to journalists following the bank's decision, oil prices touched $100 for the first time in nearly two months, adding to their sharp rise this month.
