Bund Yields Hit 15-Year High as Inflation Fears Grow

2026-05-15 07:58 By Joana Ferreira 1 min. read

Germany’s 10-year Bund yield climbed above 3.1%, reaching its highest level since May 2011, as mounting evidence of economic damage from the Iran war leads investors to expect faster interest rate hikes and weaker growth.

Oil prices surged after US President Donald Trump said “we don’t need the Strait of Hormuz open” and warned that Washington’s patience with Iran is running out, raising concerns about a renewed military campaign in the region.

This has heightened fears that higher energy costs will drive up prices across goods and services, further fueling inflation.

Investors have increased bets on European Central Bank rate hikes, now fully pricing in three increases.

ECB official Martins Kazaks reinforced this view on Thursday, stating that the central bank would need to raise borrowing costs if rising crude prices feed into inflation expectations.



News Stream
Bund Yields Steady at Over Two-Week High
German 10-year Bund yields held just above 3.05%, their highest level since May 21, as easing tensions between Israel and Iran temporarily soothed concerns that weekend attacks could disrupt US-led peace efforts in the Middle East. Investors are also focused on the European Central Bank’s policy meeting on Thursday, where policymakers are widely expected to deliver a 25-basis-point rate hike, the first move in a year, after the Israel-Iran conflict triggered an energy crisis and fueled inflationary pressures. Markets will closely watch President Lagarde’s press conference for signals on future moves. The anticipated hike comes as euro-area inflation climbed to the highest in over two and a half years. Money markets are pricing in around 70 basis points of tightening by year-end, suggesting one additional quarter-point increase and a more than 70% probability of a third.
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Bund Yields at Over Two-Week High on Inflation Fears
German 10-year Bund yields climbed above 3.05%, reaching their highest since May 21, as traders nearly fully priced in three European Central Bank rate hikes this year. Fading hopes for a swift reopening of the Strait of Hormuz, combined with a over 4% surge in Brent crude after Iran and Israel exchanged missile strikes, fueled the shift. This occurred despite President Trump’s calls for de-escalation. With the ECB policy meeting approaching, a 25 basis point rate increase is widely expected. The move follows euro-area inflation rising to 3.2% in May, its highest in over two and a half years. However, uncertainty remains after Eurozone GDP figures were revised to show a contraction in Q1 2026, the first since late 2022 and the steepest since mid-2020. Money markets now price the ECB deposit rate at around 2.7% by December, up from the current 2%, and indicate a near-certain first rate rise this month, followed by a second in September.
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Bund Yields Rise on Fed, ECB Rate Hike Expectations
German 10-year Bund yields climbed to 3.04%, tracking US Treasury yields higher after stronger-than-expected US jobs data reinforced expectations of tighter Federal Reserve monetary policy. Nonfarm payrolls surged by 172,000 in May, nearly double the forecasted 85,000, leading markets to fully price in a Fed rate hike by year-end. Investors also prepared for a likely European Central Bank rate hike next week, while monitoring potential progress in Middle East resolution efforts. Markets now anticipate a near-certain 25-basis-point ECB rate increase at the June 11 meeting, with two or possibly three hikes expected this year. This comes as euro-area inflation rose to 3.2% in May, its highest in over two and a half years. Uncertainty remains, however, after Eurozone GDP figures were revised to show a contraction in Q1 2026—the first since late 2022 and the steepest since mid-2020.
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