Traders are fully pricing two interest-rate hikes from the European Central Bank
in 2026, with swaps indicating 50 basis points of tightening, ahead of
Thursday’s policy announcement. Economists expect the ECB to hold the deposit
rate at 2%, shifting focus to future guidance. European government bonds fell,
with two-year German yields rising nine basis points to 2.47%, while the euro
dropped 0.2% to $1.1522. The moves follow spikes in oil and European gas prices
after Iran reported US and Israeli strikes on its South Pars gas field, raising
inflation concerns.
