Eurozone, U.S. Government Bond Yields Ease Ahead of ECB Decision, U.S. Inflation Data — Update

By Emese Bartha Eurozone government bond and U.S. Treasury yields eased from overnight highs despite rising oil prices and as investors looked ahead to the European Central Bank's interest-rate decision Thursday and U.S. consumer-price inflation data Friday. The 10-year U.S. Treasury yield traded at 4.796%, after reaching 4.808% in European trading. The 10-year German Bund was at 3.364%, down from 3.393%. Both still remained close to recent multiyear highs, as renewed hostilities in the Middle East pushed oil prices up. Brent oil rose 1.2% to $98.14 per barrel, after approaching $100 overnight. Markets are likely to be affected by an increase in long-term bond buybacks by the U.S. Treasury starting Wednesday. The department had scheduled a $2 billion operation for maturities between 10 and 20 years, before Treasury Secretary Scott Bessent said he wanted to increase the amount to at least $4 billion, aiming at lowering yields. The increased buybacks "could potentially help cap pressure on longer-dated Treasury yields," Pepperstone's head of research Chris Weston said in a note. On Friday, the U.S. inflation data will be a key input for both policymakers and investors ahead of the Federal Reserve's rate decision on Sept. 16. Markets were pricing a 57% probability of a rate increase, according to LSEG. The ECB, in turn, is widely expected to raise interest rates by 25 basis points Thursday, bringing the deposit rate to 2.5%. It also will release new staff forecasts on growth and inflation. A second ECB rate increase following on from an increase in June would reinforce the ECB's "cautious, data-dependent stance," Francois Rimeu, senior strategist at Credit Mutuel Asset Management, said in a note. Further rate increases that would take the deposit rate beyond 2.5% could prove necessary, however, if inflation risks intensify, "all the more so given that growth continues to surprise on the upside," he said. Given the economic resistance seen so far in the eurozone, apoBank anticipates slight upward revisions to the ECB's growth forecasts for both 2026 and 2027, said economist Bjoern Ohl in a note. "A key question for investors will be whether and how [ECB President Christine] Lagarde addresses the recent surge in energy prices and the further interest rate hikes currently priced in the market," he said. Markets currently price the peak of the ECB's deposit rate just below 3% around mid-year 2027. "Our baseline scenario remains that the ECB will not raise its key interest rate further following the September meeting," Ohl said. --Paulo Trevisani contributed to this article. Write to Emese Bartha at emese.bartha@wsj.com (END) Dow Jones Newswires September 08, 2026 12:28 ET (16:28 GMT) Copyright (c) 2026 Dow Jones & Company, Inc.