ECB President Lagarde said the economy is showing resilience that may persist into Q3.

Euro-area government bond yields held near multi-year highs on Thursday as investors awaited the European Central Bank policy decision. Analysts expect a 25bp hike, no fresh guidance and a reiteration of data dependence. Germany’s 10-year yield rose 0.5bp to 3.44% after touching 3.4514%, its highest since April 2011. Some market participants say rate-hike expectations may be overdone because energy-driven growth drag could help curb inflation; they warn that a dovish ECB tone could send borrowing costs sharply lower. Traders price the ECB deposit rate at 2.74% by December, up from 2.25% today—implying two more 25bp hikes—and expect 3.10% by Sept 2027, fully pricing a third hike and implying roughly a 40% chance of a fourth. A strategist at a German commercial bank, Erik Liem, said Lagarde’s response to recent bond moves will be watched closely and that even a small dovish hint could have a large market impact today.

U.S. API weekly crude inventories for the week to Sept. 4 due in 10 minutes.