Against the backdrop of rising geopolitical tensions between Iran and the U.S. and growing concerns over energy supply, Europe’s bond market is sending clear hawkish tightening signals. This week, German government bond yields are expected to rise for a fourth consecutive week, marking the longest run of consecutive gains since mid-July last year. In particular, the benchmark 10-year Bund yield is projected to increase by 7.5 basis points on the week. The 2-year Bund yield, which is highly sensitive to policy, is also up by 7 basis points. Traders are aggressively betting that the European Central Bank and other major central banks will keep restrictive high interest rates in place for the long term.
This trend highlights that market worries about the risk of “second-round inflation” are intensifying in a tangible way. Previously, the market broadly expected the tightening cycle to accelerate toward a peak and even turn to rate cuts. However, geopolitical friction has pushed up oil prices, recording the largest weekly jump in months, directly breaking the optimistic narrative that inflation would ease smoothly. The interest-rate derivatives market has already priced in the expectation that the ECB deposit rate will reach 2.73% in December, implying a 90% probability that further hikes will continue after September. It also expects rates to reach a high of 3.0% by September next year.
The broad surge in global sovereign bond yields means that the floor for risk-free returns has been raised again, putting significant pressure on liquidity across traditional financial markets. The U.S. dollar and major sovereign bond yields have moved higher in tandem. This not only increases borrowing cost pressure across asset classes but also substantially weakens valuation support for risk assets such as equities. When cash and safe sovereign bonds can offer more attractive risk-free returns, the trend of funds pulling away from high-volatility, high-valuation assets is likely to become even more pronounced.
For crypto assets, the tightening of the macro liquidity environment is unquestionably a warning sign. As the timing of the global central banks’ shift toward easing continues to be pushed back, demand for incremental allocation to $BTC and mainstream tokens will be severely suppressed. In a phase where real interest rates remain high and risk sentiment shifts toward traditional safe assets, the crypto market may have difficulty finding an independent trend in the short term. Investors should be alert to the risks of a potential “second bottom” and deep pullbacks triggered by liquidity contraction.
#欧洲央行 #债券收益率 #Macroeconomic Economy
This trend highlights that market worries about the risk of “second-round inflation” are intensifying in a tangible way. Previously, the market broadly expected the tightening cycle to accelerate toward a peak and even turn to rate cuts. However, geopolitical friction has pushed up oil prices, recording the largest weekly jump in months, directly breaking the optimistic narrative that inflation would ease smoothly. The interest-rate derivatives market has already priced in the expectation that the ECB deposit rate will reach 2.73% in December, implying a 90% probability that further hikes will continue after September. It also expects rates to reach a high of 3.0% by September next year.
The broad surge in global sovereign bond yields means that the floor for risk-free returns has been raised again, putting significant pressure on liquidity across traditional financial markets. The U.S. dollar and major sovereign bond yields have moved higher in tandem. This not only increases borrowing cost pressure across asset classes but also substantially weakens valuation support for risk assets such as equities. When cash and safe sovereign bonds can offer more attractive risk-free returns, the trend of funds pulling away from high-volatility, high-valuation assets is likely to become even more pronounced.
For crypto assets, the tightening of the macro liquidity environment is unquestionably a warning sign. As the timing of the global central banks’ shift toward easing continues to be pushed back, demand for incremental allocation to $BTC and mainstream tokens will be severely suppressed. In a phase where real interest rates remain high and risk sentiment shifts toward traditional safe assets, the crypto market may have difficulty finding an independent trend in the short term. Investors should be alert to the risks of a potential “second bottom” and deep pullbacks triggered by liquidity contraction.
#欧洲央行 #债券收益率 #Macroeconomic Economy