Bund Yield Eases as Falling Oil Prices Temper Rate Expectations

Germany’s 10-year Bund yield fell to 3.15% at the start of August as lower oil prices eased inflation concerns and reduced expectations of further interest rate hikes. Crude prices declined after US President Donald Trump said fresh talks with Iran would begin on Monday, easing fears of a broader conflict in the Middle East after days of escalating rhetoric. The move prompted money markets to trim expectations for additional European Central Bank tightening, although a rate hike by September remains largely priced in. Still, stronger-than-expected eurozone data continued to support the case for tighter policy. The bloc’s economy grew 0.4% in the second quarter, beating forecasts of 0.2% and marking its fastest expansion since early 2025. Meanwhile, annual inflation accelerated to 2.9% in July, with both core and services inflation also strengthening.

