Rates: the Bund at its highest since 2011, the 10-year US on its 2007 levels

(Boursier.com) — Unheard of since 2011! For the first time in more than a decade, the German Bund rate, the benchmark within the euro zone, exceeded the 2.5% mark this morning (+10.5bp). This follows a record 12-week streak of German 10-year yield advances. Money markets expect the ECB to raise its key rate by around 75 basis points to 1.5% next week, then raise it to 3.25% by next summer.

The situation is also tense on the US bond market where the 10-year rises 6bp to 4.29%, the highest since 2007. Fed members are expected to raise interest rates to “well above” 4 % this year and keep them at restrictive levels to fight inflation, Philadelphia Federal Reserve Chairman Patrick Harker said Thursday in remarks that did not go unnoticed. The sell-off in the US bond market is about to continue for a 12th consecutive week, the likes of which have not been seen since 1984 and the Paul Volcker era.

Tighter political expectations also pushed the yield on 10-year inflation-linked Treasuries up 3 basis points to 1.76%, the highest level since 2009.

The real-time FedWatch tool now gives a 95% probability of another 75 basis point rate hike from the Fed on Nov. 2 after the next meeting, which would mark the fourth rate hike consecutive oversize and would take the fed funds rate to between 3.75 and 4%. The hypothesis of a comparable increase on December 14, at the end of the last meeting of the year, also retains the majority of votes.