FX.co ★ France’s OAT Yields Rise Amid Middle East Unrest and Inflation Pressures

France’s 10-year OAT yield rose above 3.7%, nearing its highest level in 17 years, as the ongoing conflict in the Middle East pushed oil prices higher and intensified inflation worries. The United States stressed the urgency for Iran to reach an agreement while sending additional troops to the region, but Iran’s foreign minister dismissed the prospect of talks and demanded control over the Strait of Hormuz. In response to mounting inflation risks from energy price shocks, investors now expect three ECB rate hikes by the end of the year, up from two previously, after ECB President Christine Lagarde cautioned that the central bank is prepared to act “at any meeting” to contain inflation.