On Thursday eurozone bond yields hit multi-year highs: German 10-year yield rose
to 3.482%, the highest since 2011, and French 30-year yields climbed above 5.1%,
the highest since end-2003. The 10-year French-German spread widened above
90bps, the most since 2012. The moves followed the ECB’s second hike this year
and its warning that inf risks remain skewed to the upside, which pushed traders
to raise bets on further tightening — markets now price about 60bps more
tightening by the April 2027 meeting, up from roughly 51bps before the
statement. Aberdeen economist Felix Feather said the key signal was the ECB’s
acknowledgement that the economy is stronger and inf prospects more persistent
than months earlier, and that the Governing Council appears less confident that
2.5% will be the terminal rate this cycle.
