German 10-Year Bund Yield Hits February High on Inflation Fears

Germany’s 10-year Bund yield climbed to 2.79%, its highest level since February 10, as investors reacted to stronger-than-expected Eurozone inflation data and rising tensions in the Middle East. February figures showed Eurozone annual inflation at 1.9% and core inflation at 2.4%, both above forecasts. Energy costs added to market pressures, with natural gas and crude oil prices surging following the formal closure of the Strait of Hormuz and the continued suspension of Qatari LNG exports. Higher energy prices are expected to sustain inflationary pressures across Europe, potentially encouraging the European Central Bank to maintain a hawkish policy stance. Meanwhile, US President Donald Trump said the military campaign against Iran could last four to five weeks but stressed that US forces are prepared to extend operations if necessary.

Germany’s 10-year Bund yield climbed to 2.77%, its highest level since February 12, as escalating tensions in the Middle East fueled inflation concerns and prompted investors to scale back expectations for near-term interest rate cuts by major central banks. The surge in natural gas and crude oil prices, following the formal closure of the Strait of Hormuz and the continued suspension of Qatari LNG exports, has heightened worries over intensifying inflationary risks across Europe, potentially steering the European Central Bank toward a more hawkish monetary policy stance. Market participants are also looking ahead to the release of key inflation data from Italy and the wider Eurozone later today, which could provide further insight into the future path of monetary policy.

Germany’s 10-year Bund yield climbed to 2.70% at the start of March, up from a four-month low of 2.636%, as escalating tensions in the Middle East rattled global markets and investors scaled back expectations for interest rate cuts by major central banks amid renewed inflation concerns. Over the weekend, the US and Israel carried out strikes on Iran, resulting in the reported death of Iran’s Supreme Leader and the effective closure of the Strait of Hormuz, and prompting Iranian missile and drone retaliation. A sharp surge in oil and gas prices has stoked fears of renewed inflationary pressures across Europe. The region remains particularly vulnerable, with gas inventories at unusually low levels and substantial replenishment required before next winter. Meanwhile, German retail sales fell 0.9% in January, exceeding expectations for a 0.2% decline. Investors are also eyeing key European economic releases this week, including Eurozone CPI data and Germany’s factory orders report.