(Reuters) – Eurozone money markets raised the likelihood of a 75 basis point interest rate hike from the European Central Bank (ECB) in September after statements over the weekend from institution officials on the need to act decisively to control inflation.
Market participants are now pricing in a roughly 67bp hike from the September 8 monetary policy meeting, implying a 100% chance of a 50bp hike and 67% of a 75bp hike. points.
On Friday, the assumption of a three-quarter point hike was credited with just a 24% probability ahead of Reuters reports that several members of the Governing Council want to discuss it at the meeting.
And several of them pleaded this weekend in favor of a sharp rise in rates to prevent an anchoring of inflation.
This trend favors the rise in government bond yields: that of the two-year German Bund, which is particularly sensitive to key rate expectations, takes around 15 basis points to 1.126%, its highest since June 22, and the ten years more than ten points to 1.508%, the highest since June 30.
The ten-year French takes more than 13 basis points to 2.137%, also at its highest for two months.
(Report Yoruk Bahceli, French version Marc Angrand, edited by Kate Entringer)
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