FX.co ★ Bund Yield Holds Near 15-Year High on ECB Rate Hike Bets

Germany’s 10-year Bund yield was unchanged at 3.1%, hovering near its highest level since May 2011, as markets continued to price in further interest rate increases by the European Central Bank. Ongoing concerns about the fragile US-Iran ceasefire and stubborn inflation have led investors to anticipate three ECB hikes by the end of the year, with the probability of a first move in June now above 85%. At the same time, German wholesale prices jumped 6.3% year-on-year in April, the strongest increase since February 2023, driven in part by persistent tensions in the Middle East. On Tuesday, the ZEW Indicator of Economic Sentiment climbed seven points to -10.2 in May, recovering from a three-year low and beating forecasts, but it remains in negative territory as investors continue to wait for clarity on the Iran conflict.