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2026-09-17 18:08:09
[European and American bond markets under pressure as short-term yields rise after Fed rate hike] ⑴ Eurozone short-term government bond yields rose on Thursday after the Federal Reserve announced a rate hike and signaled further tightening to curb inflation. ⑵ The Fed raised its benchmark overnight rate by 25 basis points to a range of 3.75% to 4%, its first rate hike in three years. Its forecasts show that most policymakers expect at least one more rate hike before the end of the year. ⑶ Some analysts believe the Fed's message was clear: more rate hikes are coming, and its overall stance is hawkish. ⑷ The size and importance of the US economy, and the Fed's influence on other central banks, mean that US monetary policy often impacts global bond markets. ⑸ The yield on German 10-year government bonds, the Eurozone benchmark, rose by about 1.5 basis points to around 3.53%, slightly below the 17-year high of 3.57% reached on Tuesday. ⑹ The policy-sensitive short-term trend was more pronounced, with the yield on German 2-year government bonds rising by about 3.5 basis points to around 3.25%, showing an inverse relationship between bond yields and prices. (7) The yield on the 2-year U.S. Treasury note rose to its highest level in more than two years after the Federal Reserve's decision, before slightly retreating to around 4.72% on Thursday. (8) While the Fed is making headlines, European investors are also focused on high oil and gas prices, increasing the risk that the European Central Bank (ECB) will have to raise interest rates again. (9) Brent crude futures have fallen slightly in the past two days, but remain above $104 per barrel, keeping inflation concerns alive. (10) Some analysts say that a rapid decline in energy prices is needed to prevent the ECB from raising interest rates again. (11) The ECB raised its deposit rate for the second time this year last week to curb rising energy-driven inflation. (12) Revised data from Eurostat showed that overall consumer prices rose 3.2% year-on-year in August, higher than the ECB's 2% target. The market expects a greater than 40% probability of an ECB rate hike at its October meeting and has fully priced in three 25-basis-point rate hikes by June next year.
