German 10-Year Bond Yield Approaches 2-1/2-Month High

Germany's 10-year government bond yield climbed towards 2.5%, nearing a 2-1/2-month high of 2.556% hit on May 26 on expectations that major central banks will implement further interest rate hikes and maintain elevated rates for a longer period to address inflationary pressures.

Market participants anticipate the European Central Bank to raise rates to a peak of approximately 3.75% later this year, up from the current 3.25%.

Many investors are expecting 25 basis point rate hikes in both this month and the following month.

CB President Lagarde recently highlighted that inflation in the Eurozone remains at elevated levels, indicating the need for additional monetary policy tightening.

Elsewhere, the Federal Reserve is also scheduled to announce its rate decision next week, while the Reserve Bank of Australia and the Bank of Canada surprised markets with a 25 basis point interest rate increase in their respective recent meetings following a pause.