Traders tend to expect both the European Central Bank and the Bank of England to raise interest rates twice in 2026.

With the surge in oil prices, traders tend to expect that both the European Central Bank and the Bank of England will raise interest rates twice by year-end, each time by 25 basis points. UK government bonds underperformed, with the 2-year yield rising by 16 basis points to 4.33%, marking the largest single-day increase since March 20. Swaps indicate that the Bank of England will hike rates by 38 basis points this year, up from Tuesday's 22 basis points. Germany's 2-year yield rose by 12 basis points to 2.71%, reaching the highest level since June 18. Swaps show that the European Central Bank will raise rates by 40 basis points this year, up from Tuesday's 26 basis points.