Soaring energy prices boost hawkish expectations, traders bet the European Central Bank will raise rates twice this year

Golden Ten Data reported on March 9 that soaring energy prices have intensified market concerns about surging inflation, leading traders to increase their bets on European Central Bank rate hikes. The swap market shows that the market now expects the European Central Bank to raise rates twice by the end of the year, each time by 25 basis points, whereas last Friday only one hike was expected. The market has almost fully priced in the first rate cut to take place in June. On Monday, natural gas prices surged by as much as 30%, continuing the largest weekly gain since the energy crisis. Earlier, oil prices had already risen above $100 per barrel as more major oil-producing countries in the Middle East restricted production and the Strait of Hormuz was effectively closed.