Germany’s 10-year Bund yield hovered around 3%, staying close to the 15-year highs reached earlier this month, as persistent inflation concerns continued to anchor borrowing costs at elevated levels. Tensions between the US and Iran escalated after the US Navy fired upon and boarded an Iranian-flagged cargo ship. This reversal came swiftly: on Friday, Iran had stated the strait would remain fully open to commercial traffic during the 10-day ceasefire between Israel and Lebanon. Also, there is no clarity on whether US and Iranian officials will meet ahead of the expiry of the 14-day ceasefire between the two countries on Tuesday. Meanwhile, the ECB is set to decide later this month, with no changes in borrowing costs expected at this meeting. Instead, focus remains on the June meeting, although the evolving situation in the Middle East could alter the outlook. On Friday, the IMF said it expects the ECB to raise rates by around 50bps in 2026 to maintain a neutral policy stance.
