Germany’s 10-year Bund yield closed at 3%, easing from Monday’s 3.08% peak—the highest level since June 2011—as heightened geopolitical tension in the Middle East and weaker-than-expected PMI data shaped market sentiment. President Trump delayed planned US strikes on Iran, citing “positive talks,” a characterization Tehran rejected, though reports pointed to indirect negotiations. At the same time, an Israeli official ruled out the possibility of a ceasefire, saying Iran had shown no willingness to compromise, and Israel’s defense minister pledged to “continue striking Iran with full force.”
On the economic front, eurozone business activity fell to a ten-month low in March, while input costs climbed at the fastest pace in more than three years, driven by surging energy prices and war-related supply chain disruptions. Despite these headwinds, markets are increasingly pricing in further ECB rate hikes, even after the central bank opted to keep rates on hold while raising its inflation forecasts and lowering its growth outlook in response to mounting regional risks.
