FX.co ★ Bund Yields Steady as ECB Rate Hike Bets Offset Geopolitical Uncertainty

Germany’s 10-year Bund yield hovered around 3.15% on Tuesday as investors balanced a rebound in oil prices against expectations of further tightening by the European Central Bank. Oil prices recovered following Monday’s sharp selloff, while uncertainty surrounding the US-Iran conflict persisted despite an improvement in risk sentiment after US President Donald Trump called off planned strikes on Iran, signaling that a diplomatic resolution remained possible. Tehran, however, denied that any negotiations were underway or being prepared. At the same time, stronger-than-expected euro area data bolstered expectations that the ECB could raise interest rates at its next meeting. The bloc’s economy grew 0.4% in the second quarter, double the consensus forecast and the fastest pace since early 2025. Annual inflation also accelerated to 2.9% in July, with both core and services inflation continuing to firm.