German government bond yields are rising, with the yield curve experiencing a bear flattening. The 10-year yield has increased for a fifth consecutive day, marking the longest streak of gains since January, as market participants ramp up their expectations for further interest rate hikes by the European Central Bank.

Pricing in the swap market now indicates an expectation for the ECB to raise rates by 21 basis points by the end of the year. This shift ends a prior three-day trend of declining rate hike bets. Expectations for the central bank's policy path now point to a cumulative 26 basis points of tightening by the middle of next year.

US Treasury futures are trading largely steady. The cash market for US government bonds is closed due to a public holiday in the United States.

UK government bonds, or gilts, are edging lower but are outperforming their German counterparts. This relative strength comes as money markets maintain their existing bets on Bank of England rate increases, with pricing suggesting an 18 basis point hike is expected by year-end.

Market Snapshot

The yield on the benchmark 10-year German Bund rose by 3 basis points to 2.94%.

German Bund futures fell by 37 ticks to 126.62.

The yield on the 10-year Italian government bond increased by 3 basis points to 3.71%.

The yield spread, or differential, between Italian and German 10-year bonds remained broadly stable at 77 basis points.

France's 10-year government bond yield climbed by 2 basis points to 3.73%.

The yield on the 10-year UK gilt was up by 1 basis point at 4.78%.