The yield on Germany's 10-year government bond surged to 3.21%, the highest level since 2011, after investors increased expectations that the European Central Bank may raise interest rates twice more by the end of this year amid rising energy prices and accelerating inflation concerns. Financial markets are now pricing in the possibility that the ECB could hike rates by 0.25% twice before year-end. Although the ECB is likely to keep the deposit rate at 2.25% at its meeting this Thursday to assess the impact of the conflict between the United States and Iran, strategists at ING Groep NV noted that markets have not fully ruled out the possibility of a larger-than-expected rate increase. Tensions in the Middle East and European natural gas prices rising faster than oil prices could keep hawkish ECB members influential. Meanwhile, Brent crude oil is approaching $100 per barrel, and European natural gas prices closed this week at their highest since 2023.
ING Groep NVING Groep NV is mentioned only as a source of a strategist comment; no direct impact on the company itself.