Germany’s 10-year Bund yield slipped back to 3%, after briefly touching 3.08% earlier in the session—its highest level since June 2011. Markets initially responded to President Trump’s decision to delay planned strikes on Iran by five days, a move he attributed to “very good and productive” talks with Tehran. Iran’s state-run Fars News Agency, however, rejected this account, stating there had been no direct or indirect negotiations with the United States and suggesting instead that Trump’s decision came after Iran threatened to target all power plants in West Asia.
Persisting geopolitical tensions, coupled with the recent spike in energy prices, have prompted traders to price in at least three European Central Bank rate hikes this year. The ECB left interest rates unchanged last week but raised its inflation projections and cut its growth forecasts, while warning that risks linked to the conflict in the Middle East are mounting.
