Eurozone government bond yields increased on Monday as renewed geopolitical tension in the Middle East lifted oil prices and revived inflation concerns. Germany’s benchmark 10‑year Bund yield edged up to 2.86%, a rise from its March lows recorded last week, while the two‑year Bund climbed to 2.53%. The rise in yields coincided with a 0.92% increase in crude‑oil prices after weekend developments in the Strait of Hormuz, where a temporary halt to US‑Iran hostilities was announced ahead of a technical meeting in Doha.
Investors are also factoring in upcoming macro data. Euro‑area consumer‑confidence and business‑conditions figures for June are slated for later in the session, and U.S. non‑farm payrolls data later in the week are expected to influence expectations for two additional 25‑basis‑point Federal Reserve rate hikes before December. Current market pricing reflects a probability of two 25‑bp hikes.
In monetary‑policy news, European Central Bank President Christine Lagarde will address the ECB’s Sintra Forum, sharing the stage with Bank of England Governor Andrew Bailey and former Federal Reserve Chair Kevin Warsh. Bond markets are closely watching her remarks for any signal that could alter expectations of at least one further 25‑basis‑point ECB rate increase this year, following the recent deposit‑rate hike to 2.25%.
Overall, the combination of heightened oil price volatility, pending U.S. employment data, and forthcoming Eurozone confidence releases kept sovereign‑bond yields on the upside, with market participants seeking safety in the dollar while monitoring central‑bank communications for clues on future monetary‑policy moves.