Bonds: Interest Rates at Levels Last Seen in 2011

With oil prices rising significantly, interest rate hikes are becoming increasingly likely. The yield on 10-year German government bonds has risen to its highest level in 15 years. U.S. interest rates are also on the rise.

July 24, 2026. FRANKFURT (Deutsche Börse). With the price of Brent crude oil briefly exceeding $100 per barrel, inflation fears are flaring up again—and expectations of interest rate hikes are rising. Yields therefore continued to trend upward this week. “The escalation in the Middle East, where mutual attacks continue to target civilian infrastructure, is fueling growing uncertainty,” notes Helaba analyst Ralf Umlauf. He adds that shipping is now at risk not only in the Strait of Hormuz but also in the Red Sea due to the Houthi rebels.

The yield on 10-year German government bonds rose above 3.20 percent yesterday, Thursday—the highest level since 2011. As of Friday at noon, it still stands at 3.18 percent. By comparison: a week ago, it was 3.14 percent; a month ago, 2.85 percent. The yield on 10-year U.S. Treasury bonds briefly climbed to 4.70 percent; it is now slightly lower.

“ECB Interest Rate Hike Expected in September”

“The market now expects the ECB to raise key interest rates again in September,” reports Arthur Brunner, who trades bonds for ICF Bank. At yesterday’s ECB meeting, central bank officials confirmed the current key interest rate level and left the deposit rate at 2.25 percent.

The next meeting of the U.S. Federal Reserve is scheduled for next week. “The Fed is likely to keep its key interest rates unchanged once again,” says Commerzbank analyst Bernd Weidensteiner. While the discussion about an interest rate hike has gained momentum, “the surprisingly low inflation figure in June initially took some pressure off the Fed.” Since then, however, the outlook has clouded over again.

Argentina’s Creditworthiness Improves

In the government bond market, the upgrade in Argentina’s bond ratings is having a noticeable impact, as reported by Gregor Daniel of Walter Ludwig Wertpapierhandelsbank. The rating agency Moody’s has raised the country’s bond rating from Caa1 to B3, with a positive outlook. “Even though the country remains deep in speculative territory, all three major rating agencies now rate Argentina above the ‘highly distressed’ category,” reports Bloomberg. This marks a milestone for a country that for years has been among the riskiest issuers on global markets. According to Daniel, the news led to buying of Argentine government bonds (XS0501195993).

“Buying Interest Rises Due to Higher Interest Rates”

Furthermore, the rise in interest rates is benefiting the corporate bond market. “Now that interest rates have risen slightly, buying interest has increased,” explains Daniel. He sees demand for Heidelberg Materials bonds maturing in 2036 (XS3270897575), which currently offer a yield of 4.21 percent. Investors are also buying a Deutsche Pfandbriefbank bond issued just over two weeks ago with a maturity date of 2029. At the current price, this yields a return of 4.53 percent (DE000A3827B8). Also in demand: recently issued RWE bonds maturing in 2037, currently yielding 4.23 percent (XS3430748676).