FX.co ★ Bund Yields Plunge as US-Iran Ceasefire Eases ECB Rate Hike Expectations

Germany’s 10-year Bund yield fell 15 basis points to 2.93% as oil and European natural gas prices slumped following a ceasefire agreement between the US and Iran. The deal, which pauses the US-Israel military campaign in return for Iran reopening the Strait of Hormuz, has raised hopes for a temporary easing of tensions in the Middle East, even as underlying frictions remain. With geopolitical risk receding, investors have pared back expectations for European Central Bank (ECB) tightening, effectively pricing out one rate hike from their 2026 outlook. Markets now foresee two rate increases this year, down from earlier projections.