Traders Fully Price Three More ECB Hikes by Mid-2027

The signal here is about the rate path rather than any single hike: swaps now embed a full sequence of tightening through mid-2027, which marks a shift from the earlier debate over when cuts would arrive. That repricing is already visible at the front end of the German curve, where the two-year yield has returned to levels last seen in 2023, so the pressure is concentrated in short-dated funding costs rather than the long end. The open question is whether the ECB's own communication keeps validating what the swaps market has already discounted, or whether the pricing runs ahead of the policy path.