Eurozone Bond Yields Rise as Brent Touches $100; 10-Year Bund Yield Hits 15-Year High -- Update

By Emese Bartha

Eurozone government bond yields rose, with the 10-year German Bund yield hitting a new 15-year high on Wednesday as Brent crude oil breached $100 a barrel and investors anticipated a quarter-point interest-rate increase by the European Central Bank on Thursday.

Long-dated U.S. Treasury yields fell while shorter-dated yields edged higher as investors awaited an announcement by the U.S. Treasury on the size of its long-dated bonds buyback operation.

The dollar traded steady, paring its previous losses and helped by the rise in oil prices, even as it remained vulnerable given a strengthening Japanese yen. The DXY index, which measures the dollar's value against a basket of currencies, was stable at 98.822, having hit a near three-week low of 98.617 earlier. The yen hovered close to a six-month high against the U.S. currency.

Continuing military escalation between the U.S. and Iran drove the latest rise in oil prices, pushing Brent crude oil above $100. The U.S. destroyed five Iranian oil tankers on Tuesday in response to fresh attempts by Tehran to strike U.S. warships in the Middle East in recent days, according to U.S. Central Command.

The 10-year Bund yield hit a new 15-year high of 3.400%, while the 10-year U.K. gilt yield rose 4.6 basis points to 5.207%. The 10-year U.S. Treasury yield last traded 0.4 basis points higher at 4.807%, while the 30-year Treasury yield fell 1.2 basis points to 5.252%, according to Tradeweb.

"Euro rates continue to trade largely as a function of energy rather than domestic fundamentals," Evelyne Gomez-Liechti, multi-asset strategist at Mizuho said in a note.

Brent crude oil last traded 2.6% higher at $100.51 a barrel.

"Persistent tensions in the Middle East have kept oil prices on an upward trend, sustaining inflation concerns," said Bas Kooijman, CEO and asset manager of DHF Capital in a note.

Still, elevated U.S. Treasury yields could help limit any falls in the dollar, he said.

Meanwhile, investors are watching growing amounts of government bond issuance. Germany sold August 2036-dated Bunds at an average yield of 3.39% on Wednesday. Later in the day, the U.S. Treasury will auction $39 billion in 10-year notes.

In the U.S., the Treasury is also scheduled to outline Wednesday the size of its buyback operation of 10-year notes and 20-year bonds.

The Treasury recently announced an increase in long-end debt buybacks to at least $4 billion per operation, up from $2 billion. The move signaled the Treasury's unease at high borrowing costs and helped to bring down long-dated U.S. government-bond yields from lofty levels.

"Expectations have risen materially since the Treasury indicated purchases in the 10-30-year sector would at least double, with the market increasingly leaning towards a larger-than-minimum operation," said Mizuho's Gomez-Liechti.

Meanwhile, investors in the eurozone await the ECB's decision on Thursday and its accompanying explanation.

"We expect the ECB to raise rates by 25 basis points to 2.50% on Thursday, but this could mark the final hike of the cycle unless energy prices continue to rise," David Zahn, head of European fixed income at Franklin Templeton said in a note.

"The ECB began tightening relatively early, and the combination of higher bond yields and elevated energy costs should weigh on European growth in the near term, giving policymakers scope to remain on hold."

As the rate hike is close to a done deal, investors will watch for the ECB's new GDP and inflation forecasts, and any signals on the future rate path.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

September 09, 2026 07:19 ET (11:19 GMT)