The yield on Germany's 10-year government bond remains above 3.6%, approaching a 17-year high

⑴ The yield on Germany's 10-year government bonds remained steady above 3.6%, close to the highest level since June 2009, as investors weigh statements from European Central Bank President Lagarde, preliminary inflation data, and persistently high oil prices. ⑵ Lagarde stated that the recent surge in inflation has yet to generate significant second-round effects in the Eurozone, suggesting that a measured policy response remains appropriate. ⑶ With Eurozone inflation now above 3% and potentially nearing 4% by year-end, the market expects up to four more rate hikes in the coming year, following two increases over the summer. ⑷ Economists generally expect the European Central Bank to keep rates unchanged at the October 29 meeting and to resume tightening in December, when new economic forecasts will be released. ⑸ Meanwhile, Spain's EU-harmonized inflation rate rose to 5% in September, the highest in three years and well above the European Central Bank's 2% target. In addition, Brent crude oil prices remain elevated as negotiations to reopen the Strait of Hormuz have stalled.