European stocks edged higher on the 10th, with the STOXX Europe 600 index closing at a record high for the fifth consecutive trading day. Meanwhile, in eurozone bond markets, yields rose against a backdrop of higher oil prices, and financial markets are pricing in the view that the ECB's deposit rate will climb from the current 2.25% to around 2.7% by year-end, and be raised further to about 2.8% by March 2027. Crude oil futures gained after Iran stated that the reopening of the Strait of Hormuz requires the US to meet conditions including compensation, lifting the oil and gas sector index. The London stock market fell back, with the FTSE 100 slightly lower and the mid-cap FTSE 250 index down 0.44%. Eurozone employment data and US CPI figures are due later this week, and are in focus for clues on the interest rate outlook.
ECB rate hike expectations strengthen, pushing deposit rate to 2.7% by year-end, which is positive for the policy rate level.
Rising ECB rate expectations and higher oil prices push bond yields up, benefiting the yield level.
