Germany’s 10-year Bund yield slipped to 3.05% as investor sentiment brightened on hopes of renewed US–Iran peace talks, with Pakistan offering to host further negotiations. The most recent round of discussions in Islamabad, however, ended without a breakthrough, prompting US President Donald Trump to order a naval blockade of the Strait of Hormuz.
Prospects for a peace agreement and a potential reopening of the Strait drove oil prices below $100, offering a temporary reprieve from inflation worries. Nonetheless, the Bund yield remains close to its highest levels in 15 years, underscoring persistent inflationary pressures. Markets are now bracing for a more hawkish European Central Bank, with traders pricing in at least two interest rate hikes by the end of 2026.
