FX.co ★ German 10-Year Bond Yield Swings Around 2.5%

Germany's 10-year Bund yield remained steady at approximately 2.5% as investors closely observed the unfolding situation in the Middle East, ongoing inflationary pressures, and the prevailing monetary policy environment. Tensions escalated after the United States joined the conflict and conducted strikes on Iran, raising fears about a potential closure of the Strait of Hormuz—a vital corridor for worldwide oil transportation—which could result in increased oil prices. Economically, preliminary Purchasing Managers' Index (PMI) data presented a mixed picture: private sector activity within the Euro Area showed signs of stabilization with Germany returning to growth, while France witnessed a deeper contraction. Meanwhile, markets are still anticipating a 25-basis-point reduction in interest rates by the European Central Bank scheduled for September, which is expected to lower the key deposit rate to 1.75%.