German Bund Yield Eases But Remains Near Multi-Year Highs

Germany’s 10-year Bund yield edged down to 3.07%, remaining close to multi-year highs as elevated energy prices strengthened expectations of faster inflation and further European Central Bank rate hikes. Investors are also watching developments in Beijing amid optimism that the US-China summit could improve global trade relations. President Trump is expected to ask Chinese President Xi Jinping to help end the Iran war, although he said shortly before his trip that such assistance was not necessary. Hopes for a lasting peace agreement between the US and Iran have diminished this week, effectively keeping the Strait of Hormuz closed and intensifying concerns about inflationary pressures. Consequently, money markets are now pricing in nearly a 90% probability of a rate increase by the European Central Bank at its June meeting, with almost three hikes fully priced in by the end of 2026.

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