Germany’s 10-year Bund yield climbed to 3.148% on Friday, extending gains for a second consecutive session and moving further away from Wednesday’s three-week low of 3.10%. The increase in yields followed a rise in oil prices, which reignited concerns that persistent inflationary pressures could constrain the extent of future monetary policy easing by central banks.
Investor sentiment remained cautious amid uncertainty over the durability of any agreement to reopen the Strait of Hormuz. Brent crude extended its advance for a second session after reports that Iran may restrict US and Israeli vessels from transiting the waterway and seek compensation from countries it deems hostile.
The European Central Bank kept interest rates unchanged at its July meeting, following a 25-basis-point hike in June—its first increase in three years—against a backdrop of renewed, energy-driven inflation pressures. At the same time, German industrial production in June rose more than expected, reinforcing signs that the euro area’s largest economy may finally be gaining momentum.
