DBDaily: Oil back above USD100; US10yr yields highest since Jan-25

Research evidence excerpt

DBDaily: Oil back above USD100; US10yr yields highest since Jan-25

Deutsche Bank

Research

Economics Date

DBDaily 23 July 2026

Oil back above USD100; US10yr yields

Phil Odonaghoe highest since Jan-25

Economist

+61-2-8258-1606

Middle East “Round 2” prompts a return to hawkishness from

ECB.; BoJ preview, Australia CPI preview; latest Asia weekly

***Last call for DB’s Fed survey: What do you think would happen if the Fed

hikes in July? Only a few minutes to complete, survey here.

US equities were weaker Thursday, S&P down 1.2%, NASDAQ down 2.2%.

US10yr yields up a further 4bps to 4.69%, highest since January 2025. Oil again

dominated sentiment: rising 7% to USD100.68/bbl (Brent), back above

USD100/bbl for the first time since 24 May. The gain in oil follows a widening of

the Middle East conflict with attacks by Houthi militants on Saudi tankers in the

Red Sea.

ECB kept rates on hold as expected. But Mark Wall notes a round trip in

messaging since the last meeting, the hawkishness of June had started to subside

in Sintra as oil prices fell post-MOU, but it has returned as the conflict in the

Middle East re-escalates. The bottom line is, the ECB did not challenge what the

market is currently pricing: policy rates rising to 2.75% and possibly higher.

Mark is holding his view that the ECB stops at 2.50% (another 25bp hike in Sep),

but risks are clearly skewed towards a further hike to 2.75%. For that risk to

materialize, energy prices will need to remain persistently elevated and/or there

would need to be evidence of second-round effects.

On the US curve, Matt Raskin notes that model estimates point to upside on both

the Fed path and term premia. Amid the renewed tensions in Iran, 2y and 5y USTs

are now a touch above Matt’s forecast for the year, while longer-term yields are