Germany’s 10-year Bund yield fell toward 2.95%, its lowest level since May 29, after oil prices slumped on news of a preliminary agreement between the United States and Iran to end their three‑month conflict. The accord, which includes lifting the US blockade and reopening the Strait of Hormuz—a vital corridor for around 20% of global energy shipments—sparked a sharp drop in crude prices and eased pressure on central banks to raise interest rates to fight inflation.
A memorandum of understanding is expected to be signed in Switzerland this Friday, though uncertainty persists as markets await more details and the issue of Iran’s nuclear program remains unresolved. Money markets now anticipate about 30 basis points of additional tightening by the European Central Bank this year—roughly the equivalent of one further rate increase—down from nearly two hikes that had been priced in before last Thursday’s rate move.
