German Bund Yields Slide Toward Seven-Week Low
German 10-year bund yields slipped toward 2.95%, approaching their lowest level since April 8, amid growing optimism over a potential US-Iran peace deal. Investors remain focused on Middle East developments, heartened by the recent absence of negative signals from both sides and lingering hopes that an agreement to ease tensions and reopen the Strait of Hormuz could still be achieved despite recent strikes. Money markets now anticipate the ECB deposit rate at 2.6% by December, up from the current 2% but below last week’s expectation of 2.75%, with an 80% probability of a first rate increase next month. Meanwhile, ECB official Isabel Schnabel told Reuters the central bank should raise interest rates in June even if a peace deal materializes, pointing to the scale and persistence of the energy shock.

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