19.03.202609:32:42UTC+00Bund Yield Nears 3% as Iran War Fuels ECB Hike Bets

Germany’s 10-year Bund yield climbed to 2.97%, approaching last week’s two‑year high of 2.99%, as investors sharply increased their expectations for further ECB rate hikes ahead of today’s policy announcement. Expectations for rate cuts have largely vanished in the wake of the US‑Israeli conflict with Iran, which has sent energy prices surging and reignited inflation fears.

A 25% jump in European natural gas prices following attacks on Qatar’s LNG facilities, alongside Brent crude trading at $117 per barrel, has significantly heightened inflation risks for the Eurozone. As a result, markets are now pricing in more than 55 basis points of additional ECB tightening by year‑end—equivalent to at least two 25‑basis‑point increases. The first hike is now fully priced in by June, marking a sharp reversal from pre‑war expectations that had still allowed for the possibility of a rate cut.