Markets now price nearly 40bps of ECB tightening by December, lifting 10-year Bund yields to their highest daily gain since May.
European bond markets sold off sharply as traders repriced ECB rate hike expectations following renewed energy supply concerns. The implied tightening by December rose +12.7bps to 39.5bps, suggesting a potential third hike this year after June’s move.
Germany’s 10-year Bund yield jumped +9.9bps to 3.09%, its largest single-day increase since May. France’s 10-year OAT yield climbed +13.5bps to 3.93%, reaching its highest level since 2009.
The repricing reflects heightened sensitivity to energy risks, which could further tighten monetary policy in the eurozone.