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ECB-hawkish repricing lifts rate bets as Bunds sell off

Market pricing for ECB hikes by December jumped, with French 10-year OAT yields at their highest since 2009 amid a sharp Bund selloff.

Reported · Written up by our desk · Central Banks

Deutsche Bank Research, as highlighted by FXStreet, said European assets are increasingly sensitive to renewed energy shock risk, with traders repricing expected ECB policy tightening into year end. Market pricing for ECB hikes by December rose sharply, implying a chance of three hikes this year after the June move.

That shift has fed through to sovereign debt, with 10-year Bund yields posting their biggest daily jump since May and French 10-year OATs rising to their highest level since 2009, reflecting broader bond market pressure tied to higher rate expectations.

FXStreet also noted that in FX markets, EUR/USD has been holding its recovery north of 1.1400, supported by a modest pullback in the US dollar despite ongoing Middle East tensions that continue to support the greenback. Elsewhere in the same trading snapshot, GBP/USD was reported to hover near 1.3400, with UK political uncertainty easing but geopolitical tensions keeping sterling under pressure.

Latest closeEUR/USD 1.139 ▼0.1%|GBP/USD 1.329 ▼0.5%

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