Germany’s 10-year Bund yield slipped to around 3.15%, holding below the 15-year peak above 3.2% reached in July. The move reflected renewed optimism over a potential agreement in the Middle East, which eased inflation worries and pushed oil prices lower.
Pakistan indicated it was hopeful that the United States and Iran were “close to some sort of arrangement” over the Strait of Hormuz, a development that could ease regional tensions and help restore energy flows. This more positive tone came on the heels of tougher language from President Trump, who said Tehran should pay reparations for deaths linked to attacks and domestic protests, responding to demands issued by Iran over the weekend.
Investors are now weighing whether diplomatic progress can pave the way for a broader agreement and a more durable decline in energy prices. A sustained drop in oil costs could help moderate inflationary pressures and give central banks greater room to maneuver on monetary policy.
The European Central Bank kept interest rates unchanged in July, following a 25-basis-point increase in June—its first rate hike in three years.
