Bund Yield Holds Near 3.1% on ECB Hike Expectations

Germany’s 10-year Bund yield remained close to 3.1%, near its highest level since May 21, following its longest winning streak since January as expectations grew for another European Central Bank interest rate hike in September. On Wednesday, Brent crude reached two-week highs after renewed US-Iran strikes, with US President Trump declaring the Iran ceasefire over. However, he also stated that Iran still wants to make a deal "badly," leaving room for potential negotiations. Traders are now pricing in over 30 basis points of additional ECB tightening this year, signaling at least one potential rate hike. Politically, Germany’s cabinet approved a 2027 budget draft, planning €555.4 billion in spending and increasing borrowing to €203.6 billion, up from earlier estimates. In France, far-right leader Marine Le Pen confirmed her 2027 presidential bid, with polls favoring her National Rally, while uncertainty remains over President Macron’s successor.

Germany 10 Year Government Bond Yield increased to 3.09%, the highest since May 2026. Over the past 4 weeks, Germany 10Y Bond Yield gained 2.81 basis points, and in the last 12 months, it increased 45.28 basis points.

Germany’s 10-year Bund yield rose to 3.1%, reaching its highest since May 21 and marking its longest winning streak since January as renewed US-Iran strikes pushed oil prices to two-week highs and fueled inflation concerns, strengthening expectations that the ECB will keep interest rates elevated for longer. US President Trump further escalated tensions by stating that, as far as he is concerned, the Iran ceasefire is over. Traders are now pricing in more than 30 bps of additional ECB tightening this year, signaling at least one potential rate hike, possibly as early as September. On Monday, Germany’s cabinet approved a 2027 budget draft, outlining €555.4 billion in spending and increasing borrowing to €203.6 billion, up from earlier estimates. In France, far-right leader Marine Le Pen announced she intends to run in the 2027 presidential election, with polls currently favoring her National Rally, while uncertainty persists over who will emerge as President Macron’s successor.