Germany’s 10-year Bund yield climbed to 2.95%, rebounding from three-month lows reached earlier this week, as higher oil prices and hawkish comments from European Central Bank officials weighed on bond markets. Crude prices attempted to stabilize after a sharp selloff as planned US-Iran peace talks in Switzerland were abruptly canceled, casting fresh doubt on the durability of the tentative agreement reached over the weekend to end the Middle East conflict. On the monetary policy front, ECB policymakers reinforced a firm stance on inflation. Governing Council member Pierre Wunsch suggested another rate hike could come as soon as next month if inflation pressures broaden, while ECB Chief Economist Philip Lane said the euro-area economy may be able to withstand higher rates. Money markets currently expect at least one additional ECB rate hike this year, following this month’s 25-basis-point increase that lifted the deposit rate to 2.25%, marking the first rate increase since 2023.

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