FX.co ★ Germany 10-Year Bund Yield Highest Since March 2011

Germany’s 10-year Bund yield rose above 3.25%, its highest level since March 2011, as government bonds came under renewed selling pressure worldwide. The move was driven primarily by fading hopes of a swift resolution to the Iran conflict, which pushed oil prices higher and rekindled worries about stubborn inflation. Additional pressure stemmed from mounting concerns over fiscal sustainability in major economies, including France, Japan, the UK, and the US, weighing broadly on sovereign debt markets. Investors are increasingly pricing in a tighter trajectory for European monetary policy, with the ECB deposit rate now expected to reach 2.76% by March 2027, compared with 2.25% at present, and markets assigning a probability of over 90% to a rate hike in September. In contrast, softer economic data in the US have tempered expectations of an imminent rate increase by the Federal Reserve.