Live Updates > Live Update Details
2026-07-15 19:06:12
[Eurozone bond yields rebounded along with oil prices; two Middle Eastern energy choke points face blockade risk; ECB rate hike expectations rise again] ⑴ Eurozone bond yields rose slightly on Wednesday, mainly driven by rising oil prices, after the market experienced sharp fluctuations the previous day due to escalating Middle East conflict and US inflation data. ⑵ The yield on Germany's two-year bond, most sensitive to central bank interest rate expectations, rose about 3.5 basis points to 2.756% on the day. On Tuesday, the bond had surged 8 basis points to a two-year high before giving back gains due to lower-than-expected US CPI. ⑶ With ongoing fighting between the US and Iran, Iran has announced the closure of the Strait of Hormuz, while the US has reinstated a maritime blockade of Iranian ports. Meanwhile, the Iranian Revolutionary Guard has threatened to close other export routes or use the Houthi rebels in Yemen to blockade the Bab el-Mandeb Strait, putting two of the world's most critical energy choke points at risk of simultaneous blockade. ⑷ Brent crude oil rose about 1% on Wednesday to $85.60 per barrel, with the continued rise in energy prices gradually being transmitted to bond market pricing. (5) Money market pricing for further ECB rate hikes this year has risen to approximately 43 basis points, up from 30 basis points a week ago, but down from Tuesday's peak of 48 basis points. (6) ING analysts point out that ECB interest rate pricing will be primarily driven by oil and gas prices. While US inflation is already showing signs of decline, European inflation may not have yet peaked. If energy prices continue to rise, the divergence in policy paths between the two will widen further.
