Bund Yield Dips Toward 2.9%
Germany’s 10-year Bund yield fell toward 2.9%, tracking declines in US Treasury yields and crude prices. While shipping through the Strait of Hormuz remains volatile and short-term oil supply is unpredictable, structural oil supply is expected to rise following OPEC+’s production increase. Softer-than-expected inflation and dovish remarks from ECB President Christine Lagarde last week led markets to reduce expectations for a third ECB rate hike this year, though a second hike remains likely. June’s data showed headline inflation at 2.8% and core inflation at 2.4%, both below forecasts. At the ECB’s Sintra Forum, Lagarde noted a more balanced outlook for euro-area inflation and growth. Additionally, a weaker-than-expected US jobs report further lowered expectations for a near-term Federal Reserve rate hike.

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