FX.co ★ Bund Yields Hit 3% on Oil Surge

Germany’s 10-year Bund yield climbed above 3%, its highest level since June 10, as oil prices hit two-week highs following renewed strikes between the United States and Iran. The escalation has intensified inflation concerns and reinforced expectations that the ECB will keep interest rates elevated for an extended period. In a further tightening of market conditions, Washington revoked a temporary license that had allowed Iranian oil sales.

Money markets are now pricing in roughly 30 basis points of additional ECB tightening this year, implying at least one more rate increase, potentially as soon as September. On the fiscal front, Germany’s cabinet on Monday approved a draft budget for 2027, planning €555.4 billion in expenditures and raising projected borrowing to €203.6 billion, above earlier estimates.

In France, far-right leader Marine Le Pen confirmed she intends to run in the 2027 presidential election. Current polls give her National Rally party an advantage, even as uncertainty lingers over who will ultimately succeed President Emmanuel Macron.