Euro Bond Yields Rise as Oil Prices Climb Amid Strait of Hormuz Concerns

The European bond market saw yields rise on Tuesday as oil prices continued to climb due to concerns over the Strait of Hormuz. US President Donald Trump's demand for Iran to pay compensation for people killed in wars, attacks, and protests dimmed the prospect of an imminent deal to reopen the strait.

Germany's 10-year bond yield rose by 2 basis points to 3.201 per cent, following a 5-basis point increase on Monday. This rise is linked to increasing oil prices, as Brent crude climbed 2.0 per cent to $89.9 a barrel.

The European Central Bank (ECB) rate expectations also played a role in the yield increase, with traders pricing in 41 basis points of further monetary tightening this year, up from 37 basis points on Friday. This reflects concerns over inflation and economic growth despite relatively resilient markets.