Germany’s 10-year Bund yield climbed toward 2.98%, its highest level since June 19, as crude oil prices rose following attacks in the Strait of Hormuz. The escalation pushed Brent above $72 per barrel, its strongest level since early July, stoking renewed inflation fears. In response, traders increased wagers on further ECB rate hikes, after Executive Board member Isabel Schnabel cautioned that the economic impact of the Iran conflict is still being felt and that core inflation remains stubbornly high.
At the same time, Germany’s cabinet on Monday approved a draft budget for 2027 that foresees €555.4 billion in spending and raises planned borrowing to €203.6 billion, up from the €196.5 billion projected in April. In France, a Paris court is set to rule on Tuesday on Marine Le Pen’s appeal against an election ban linked to alleged misuse of EU funds—a decision that could shape her eligibility for the 2027 presidential race and add to mounting political uncertainty.
