Germany’s 10-year Bund yield rose above 3%, reaching its highest level since June 10, as oil prices climbed to two-week highs following renewed strikes between the US and Iran.
The escalation heightened inflation concerns and strengthened expectations that the ECB will keep interest rates elevated for longer.
Washington also revoked a temporary license permitting Iranian oil sales, further tightening market conditions.
Traders are now pricing in about 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.