Yields on Germany’s 10-year Bunds approached 3.1% as inflation concerns intensified and expectations of a European Central Bank (ECB) interest rate hike strengthened. The move came against a backdrop of rising tensions in the Middle East, with the United States and Iran exchanging fresh strikes.
President Donald Trump warned that Iran is taking “too long” to negotiate a peace agreement and will now “pay the price,” while Iranian Parliament Speaker Mohammad Bagher Ghalibaf said on Wednesday that Tehran would respond “decisively and without delay” to any aggression.
Investors are also closely watching the ECB’s policy meeting on Thursday, where policymakers are widely expected to deliver a 25-basis-point rate increase — the first in a year — following the Israel–Iran conflict, which has triggered an energy shock and intensified inflationary pressures. Markets will pay particular attention to President Lagarde’s press conference for signals on the future path of monetary policy.
