Germany’s 10-year Bund yields fell toward 2.95%, their lowest since May 29, after oil prices tumbled following the preliminary US-Iran agreement to end their three-month conflict. The deal, including lifting the US blockade and reopening the Strait of Hormuz, a vital route for 20% of global energy, sparked a sharp drop in oil prices, reducing pressure on central banks to raise interest rates to curb inflation. Money markets now expect about 30 basis points of further ECB tightening this year, equivalent to one rate hike, down from nearly two before last Thursday’s increase. ECB President Christine Lagarde welcomed the development but cautioned that past hopes had been dashed and noted emerging second-round effects from the conflict. ECB’s Joachim Nagel added that oil supply recovery would take months, delaying any immediate inflation relief.

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