FX.co ★ Bund Yields Edge Down

Germany’s 10-year Bund yield edged down to 2.97% on Monday, after climbing more than 6 basis points on Friday. The move followed a drop in oil prices, which eased inflation concerns amid signs of diplomatic progress between the US and Iran.

Negotiators from both countries agreed on a roadmap toward a possible final agreement, bolstering hopes of reduced tensions in the Middle East. Oil markets reacted positively to the news, even as President Donald Trump warned that the US could resort to military action if Hezbollah continues its attacks on Israel.

As part of the talks, Washington and Tehran also set up a communication channel designed to avoid incidents and miscalculations, and discussions are ongoing over how to restore safe commercial shipping through the Strait of Hormuz.

At the same time, money markets are still pricing in at least one additional interest rate increase by the European Central Bank this year. This comes on the heels of the ECB’s recent 25 basis point hike, which lifted the deposit rate to 2.25%, its first increase since 2023.