German Government Bonds Fall as Surging Energy Prices Boost Market Expectations for ECB Rate Hikes

MaticHoleFiller · 2026-03-18T03:04:36+00:00

German government bonds fell broadly due to rising oil and natural gas prices, with increased market expectations for ECB rate hikes. UK government bonds focused on energy quotations, disregarding economic data, with expectations for Bank of England rate hikes of 22 basis points before year-end.

MaticHoleFiller

2026-03-18 03:04:36

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German government bonds declined across the board as rising oil and natural gas prices increased bets on the European Central Bank raising interest rates next year.

Traders have increased their expectations for the ECB’s 2027 rate hike by 3 basis points, anticipating a tightening of monetary policy by 52 basis points by mid-next year; swap trades imply a 47 basis point rate increase before the end of the year, in line with Thursday’s expectations.

The UK bond market is expected to focus mainly on rising energy prices, while overlooking weaker-than-expected UK GDP data for January.

Swap contracts project a 22 basis point rate hike by the Bank of England by the end of the year, unchanged from previous forecasts.

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Editor: Li Zhaofu

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