Germany’s 10-year Bund yield hovered near 3.1%, close to its highest level since May 21, after logging its longest winning streak since January, as expectations strengthened for another European Central Bank interest rate increase in September. On Wednesday, Brent crude climbed to a two-week high following renewed US–Iran strikes, after US President Trump declared the Iran ceasefire over. He also said Iran still “badly” wants a deal, preserving the possibility of further negotiations.
Money markets are now discounting more than 30 basis points of additional ECB tightening this year, implying at least one further rate hike. On the domestic policy front, Germany’s cabinet approved a draft budget for 2027 that envisages €555.4 billion in spending and raises planned borrowing to €203.6 billion, above earlier projections. In France, far-right leader Marine Le Pen confirmed she will run in the 2027 presidential election. Polls currently favor her National Rally party, while the outlook for President Macron’s succession remains uncertain.
