Euro Zone Bond Yields Plummet as Iran Strikes Pause
The euro zone bond yields dropped on Monday following the US and Iran's decision to pause strikes. This move helped calm short-term inflation fears as oil prices tumbled more than 5%.
Oil prices fell after the US halted attacks on Iran, raising hopes for a diplomatic solution that would allow shipping to resume in the Strait of Hormuz.
Greece's 2-year yields dropped by 2.5 basis points (bps) to 2.79%, with Germany's 10-year government bond yield down 3 bps at 3.14% and Italy's 10-year government bond yields falling 5 bps to 3.95%.
The European Central Bank chief economist Philip Lane stated that the current inflation shock is medium-sized, requiring some policy action but not aggressive moves. The central bank expects price growth to return to 2% in the next year or so and kept interest rates unchanged as expected on Thursday.