France’s 10-year OAT yield climbed to 3.6%, reaching its highest level since early January as escalating tensions in the Middle East heightened inflation concerns and strengthened expectations of further interest rate increases. Oil prices continued their upward trend, briefly moving above $100 per barrel after Iran intensified attacks on oil and transportation infrastructure across the region. Meanwhile, the International Energy Agency’s plan to release 400 million barrels from strategic reserves offered limited immediate relief, as the supply could take weeks or even months to reach the market. Money markets are fully pricing in a European Central Bank rate hike by July, with an 85% chance of a second increase by December. This marks a notable shift from late February, before the outbreak of the Iran war, when traders had placed roughly a 40% probability on an ECB rate cut before the end of the year.
