The yield on German 10-year bonds exceeded 1% for the first time since 2015

The yield on the German 10-year bond rose more than 1% today, for the first time since 2015, as investors prepare for US and UK interest rate hikes this week, with central banks stepping up their fight against inflation.

The Bank of Australia unexpectedly raised its key interest rate by 25 basis points to 0.35%, making its first such move in more than a decade, and said more would follow.

The yield of the German 10-year title was 0.97%, while it had reached 1.016% earlier today.

The meeting of the US Federal Reserve (Fed) ends on Wednesday, while the meeting of the Bank of England will take place on Thursday.

The yield on the 10-year US government bond was around 3% for the second consecutive meeting.

“Any surprise from the Fed, with an increase in interest rates by 75 basis points, would mean that yields on German bonds would likely rise to 1.25% at the end of the week or early next,” said a UBS analyst.

Producer prices in the Eurozone industry rose more than expected in March as energy prices more than doubled on an annual basis, according to data released today, while unemployment in the region continued to fall to a new record low.

The yield on the Italian 10-year bond rose 2.5 bp. at 2.88% which is the highest level since March 2020.

The spread in the yield (Italian) between the Italian and the German 10-year bond increased to 191.80 bp, the highest level since June 2020.

“Until now, the expansion of spreads has been a logical order, however, if this momentum becomes erratic, we would expect new measures from the ECB to avoid fragmentation,” said Pictet’s investment manager.

SOURCE: AMPE