2026.03.1309:28:57UTC+00German Bund Yields Surge on Oil Spike and Inflation Fears

Germany’s 10-year Bund yield rose to 2.96%, its highest level since October 2023 and poised for a second consecutive weekly gain, as mounting tensions in the Middle East stoked inflation fears and reinforced expectations of further European Central Bank interest rate increases. Oil prices continued to climb despite recent measures aimed at easing the energy supply shock, with investors doubtful that these efforts will fully counter potential disruptions in the Strait of Hormuz. The renewed surge in energy costs has led money markets to price in two ECB rate hikes this year, a sharp turnaround from last month, when no policy changes were anticipated. Market attention is now firmly on the ECB’s upcoming policy meeting, where President Christine Lagarde is expected to outline how the bank intends to shield the eurozone from inflationary pressures linked to the conflict. Earlier this week, she emphasized that the ECB is determined to avoid a repeat of the inflation shocks that followed Russia’s invasion of Ukraine.