BNP Paribas sees energy shock lifting inflation, pushing bond yields higher in H2 2026
TLT•Energy shock and inflation outlook
- BNP Paribas flagged a cooling in the energy shock as oil fell back to pre-war levels following a June 17 US-Iran memorandum.
- European gas prices stayed about 43% above pre-war levels, keeping inflation pressure elevated despite easing momentum in the crisis.
- Rising inflation flipped expectations for policy easing, with the ECB delivering a 25-basis-point rate increase in June.
- Markets shifted toward tighter policy at the Fed and Bank of England, driving long-term yields higher across major sovereign markets.
- 10-year German yields rose nearly 30 basis points, while France, the UK, and the US saw moves of more than 50 basis points amid weak Q1 growth.
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