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German Two-Year Yield Turns Positive for First Time Since 2014

  • Money markets bet ECB to hike interest rates to 0% by year-end
  • Yield on two-year bond jumped as much as 16 basis points
Updated on

German two-year debt tumbled, pushing the yield above zero for the first time in eight years as investors prepared for the European Central Bank to scale back its ultra-loose monetary policy.

The yield on two-year notes, among the most sensitive to changes in short-term borrowing costs, surged as much as 16 basis points on Tuesday to 0.04%, a level last seen in August 2014. Money markets have been cranking up wagers that the ECB will raise its key rate to 0% as soon as year-end to tame surging inflation, putting an end to years of negative policy rates.