FX.co ★ Germany’s 10-Year Bund Yield Hovers Below 3%

Germany’s 10-year Bund yield hovered just below 3%, supported by cautious optimism over a possible easing of tensions in the Middle East after the United States extended its ceasefire arrangement with Iran. President Trump prolonged the ceasefire indefinitely, even as negotiations remained stalled and the US naval blockade in the Strait of Hormuz stayed firmly in place.

Pakistan, acting as mediator, called for restraint, but Trump reiterated that the blockade would continue unless Iran agreed to concessions. At the same time, Iran’s Tasnim news agency reported indications of potential US flexibility on the blockade issue.

In this environment, market expectations for European Central Bank rate hikes have been slightly pared back, although investors still anticipate two increases this year. This adjustment reflects reduced pressure from lower oil prices, as well as the uncertain yet extended US–Iran ceasefire.