The German 10-year Bund yield, serving as the eurozone government bond market benchmark, reached a 15-year high on July 23 (local time) amid surging international oil prices. The yield closed at 3.2304%, up 2.81 basis points from the previous session — the highest level since May 2011. The rise occurred as Brent crude oil exceeded $100 per barrel during trading for the first time since May 26, driven by escalating US-Iran tensions and concerns over Red Sea shipping blockades.
German Bund Yields Extended Four-Day Rally
The German 10-year Bund yield rose for four consecutive trading days through July 23. According to Yonhap Infomax overseas interest rate data, the yield has increased on all but two days in July. The German 2-year Bund yield, which is sensitive to European Central Bank (ECB) monetary policy outlook, climbed 4.62 basis points to 2.8894% — the highest level since July 2024.
![German 10-year Bund yield long-term trend chart]()
German 10-year Bund yield long-term trend. Source: Yonhap Infomax.
ECB Held Policy Rates and Requested September Analysis
The ECB held its three key policy rates unchanged at its regular monetary policy meeting on July 23, keeping the deposit rate at 2.25% as expected. ECB President Christine Lagarde stated in the press conference that "some governors asked whether we should consider raising rates today." She added, "We have asked staff to conduct a really in-depth analysis for the September meeting."
The September meeting will feature the ECB's quarterly economic projections. The ECB has historically made major policy decisions at meetings when quarterly economic forecasts are released.
Market Priced 23bp Rate Hike for September Meeting
The eurozone Overnight Index Swap (OIS) market is pricing in a 23 basis point rate hike for September, reflecting over 90% probability of a 25 basis point increase. Laureline Renaud-Chatelain, Head of Fixed Income Strategy at Pictet Asset Management, stated, "The fact that the market is fully pricing in a September rate hike is justified by energy price developments." She added, "Oil prices would need to fall sharply for them not to raise rates."
FAQ
Why did German Bund yields reach a 15-year high on July 23?
German 10-year Bund yields climbed to 3.2304% on July 23 (local time) — the highest since May 2011 — as Brent crude oil exceeded $100 per barrel amid US-Iran tensions and Red Sea shipping concerns. The yield rise reflected market expectations of potential ECB policy tightening in response to energy-driven inflation pressures.
What did ECB President Lagarde say about future rate decisions?
ECB President Christine Lagarde disclosed on July 23 that some governors questioned whether the ECB should consider raising rates at the meeting. She stated the ECB requested staff to conduct in-depth analysis for the September meeting, when quarterly economic projections will be released.
How is the market pricing ECB policy for September?
The eurozone OIS market is pricing in a 23 basis point rate hike for the September ECB meeting, reflecting over 90% probability of a 25 basis point increase. Pictet Asset Management noted this pricing is justified by energy price developments and would require sharp oil price declines to prevent a rate hike.
