Germany’s 10-year Bund yield hovered around 2.97%, near its highest level since October 2023, as escalating tensions in the Middle East stoked inflation fears and strengthened expectations of further monetary tightening by the European Central Bank ahead of a packed week of global central bank meetings.
Oil prices remained above $100 per barrel—up more than 40% so far this month—after Iran halted shipments through the Strait of Hormuz in retaliation for US–Israeli air strikes. Israeli officials warned that the conflict could drag on for “several more long weeks,” while US President Donald Trump said Tehran is “not ready” to reach an agreement.
Major central banks, including the ECB and the Federal Reserve, are widely expected to leave interest rates unchanged this week. Investors will be watching closely for policymakers’ guidance on how they plan to address the economic fallout from the conflict. Money markets are currently fully pricing in an ECB rate increase by July, and imply roughly an 85% probability of another hike by the end of the year.
