The European Central Bank is expected to keep rates unchanged, providing temporary relief to the bond market, but Lagarde may leave the door open for a rate hike in September.

(1) Rainer Guntermann, interest rate strategist at Commerzbank, stated that with the European Central Bank expected to keep rates unchanged today, the eurozone government bond market may temporarily breathe a sigh of relief, and the money market currently also anticipates no rate hike at this meeting. (2) However, President Lagarde may leave the door open for a rate hike in September in her statement and has not ruled out the possibility of action at that time, so the future direction still requires attention. (3) The strategist pointed out that the yield on 10-year German government bonds has approached a high of 3.2% this year, a level that could provide support to the bond market; however, the PMI data to be released tomorrow may remind the market that economic growth still faces challenges, and recent energy price volatility also adds uncertainty to the interest rate outlook.