German Bund Yields Fall on Middle East Optimism

Germany’s 10-year Bund yield hovered around 3.12% on Thursday, down more than 8 basis points this week as optimism over a potential Middle East diplomatic breakthrough boosted expectations of lower oil prices and reduced pressure on central banks to tighten policy further. Iran said it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz, raising hopes for the resumption of energy flows, although a broader US-Iran deal remains uncertain. President Donald Trump said negotiations were ongoing and that he would “see what happens.” Lower energy prices have strengthened expectations that the European Central Bank will maintain a gradual approach to policy tightening, with markets pricing in one additional rate hike by year-end and a smaller probability of a second. Meanwhile, German factory orders rose more than expected in June, adding to evidence that Europe’s largest economy may finally be gaining momentum.




