German 10-year Bund yields rose back to 2.98% at the start of June, rebounding from the two-month lows reached last week, as oil prices climbed amid intensifying US–Iran tensions. The two countries continued to trade strikes: Iran targeted a US airbase it linked to an earlier attack on a telecommunications tower on Sirik Island, while both sides framed their actions as acts of “self-defense.” Over the weekend, Washington and Tehran exchanged proposals to amend a draft agreement aimed at extending the ceasefire and reopening the Strait of Hormuz, though the extent of any progress remained uncertain.
On the economic front, German retail sales declined in April for a fourth consecutive month, although the drop was slightly smaller than expected. Investors are now looking ahead to this week’s Eurozone inflation report. The May figures showed EU-harmonized inflation picking up in France, Italy, and Spain, while easing in Germany. Meanwhile, minutes from the ECB’s latest meeting indicated that some policymakers would have supported a rate hike in April, bolstering expectations of a 25-basis-point increase at the June 11 meeting.
