Energy Price Surge Fuels ECB Rate Hike Expectations

Energy prices have soared, intensifying market concerns over rising inflation and prompting traders to increase bets on European Central Bank (ECB) interest rate hikes. According to Jin10, the swap market now anticipates the ECB will raise rates twice by the end of the year, each by 25 basis points, compared to expectations of just one hike last Friday. The market has almost fully priced in a rate cut for June. On Monday, natural gas prices surged by 30%, continuing the largest weekly increase since the energy crisis began. Earlier, oil prices had risen above $100 per barrel due to production restrictions by major Middle Eastern oil-producing countries and the effective closure of the Strait of Hormuz.