Germany’s 10-year bund yield tumbled below 3%, hitting its lowest level since mid-April, as progress in Iran peace talks and easing inflation concerns triggered a sharp pullback from last week’s 15-year peak of 3.2%. That surge had been fueled by expectations of interest rate hikes after the Iran conflict disrupted energy markets. The reversal came as crude oil prices retreated from four-year highs, with Brent falling below $100 a barrel following US President Donald Trump’s remarks that a memorandum of understanding between the two nations had been “largely negotiated” and would reopen the Strait of Hormuz. Separately, PMI data revealed the Eurozone economy contracted in May at its fastest pace since late 2023, driven by a war-fueled surge in living costs, with S&P Global cautioning that the figures point to inflation nearing 4%. Traders now fully price in two ECB rate hikes this year.

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