2026.03.1207:45:30UTC+00German Bund Yield Hits 2023 High on Inflation Fears

The yield on Germany’s 10-year Bund climbed to 2.95%, its highest level since October 2023, as mounting tensions in the Middle East heightened inflation fears and strengthened expectations of further interest rate increases. Oil prices extended their rally, briefly rising above $100 per barrel after Iran intensified attacks on oil and transportation infrastructure across the region. An announcement by the International Energy Agency of a 400-million-barrel release from strategic reserves provided little immediate relief, as the additional supply is expected to take weeks or even months to reach end buyers. In this environment, money markets are now fully pricing in a European Central Bank rate hike by July, and are assigning an 85% probability to a second hike by December. This marks a sharp change from late February, before the outbreak of the war involving Iran, when traders saw roughly a 40% chance that the ECB would instead cut rates before the end of the year.