Germany’s 10-year Bund yield remained above 3%, hovering near its highest level since 2011, as rising crude prices and renewed inflation concerns reinforced expectations of further European Central Bank rate hikes. The ECB is widely expected to leave interest rates unchanged at its meeting on Thursday, yet markets are still pricing in two quarter-point increases in 2026, with the potential for a third hike by year-end.
Brent crude traded above $108 per barrel after US-Iran negotiations stalled, following US President Donald Trump’s decision to cancel a delegation’s trip to Pakistan for talks. According to reports, Iran has proposed reopening the Strait of Hormuz in an effort to de-escalate tensions.
Investors are also bracing for a data-heavy week, with flash estimates of Eurozone inflation and GDP in focus. In Germany, consumer sentiment fell to a three-year low in May 2026, weighed down by Middle East tensions, weaker income expectations, and rising energy costs, further clouding prospects for an economic recovery.
