Euro zone bond yields rise as oil climbs on Hormuz doubts
TLT•ECB expectations and long-dated yields
Germany's 2-year bond yield DE2YT=RR, which is sensitive to European Central Bank rate expectations, rose 2 bps to 2.811% after rising 5 bps on Monday.
"We are back to the situation where there is no war ongoing, but the Strait of Hormuz remains closed," Mohit Kumar, a senior European economist at Jefferies, said.
"The longer the strait is closed, more inventories will be depleted and greater would be the impact on oil prices."
Traders in money markets were last pricing in 41 bps of further ECB monetary tightening this year, up from 37 bps late on Friday.
Italian and French 10-year bond yields IT10YT=RR, FR10YT=RR were both up 4 bps.
Longer-dated bond yields again came under pressure and France's 30-year yield hit its highest since 2008 at 4.8004% FR30YT=RR.
Analysts have said longer-dated yields are rising as governments and AI companies borrow heavily in debt markets and economic growth remains relatively resilient, with inflationary fears from the Iran conflict also having an impact.
Bond markets were also waiting for Wednesday's U.S. CPI inflation report, which will influence the Federal Reserve's rate decisions and have knock-on effects for bond markets around the world.
Euro zone yields rise as oil prices climb
Euro zone bond yields rose on Tuesday as oil prices climbed again after U.S. President Donald Trump demanded Iran pay compensation to the U.S., further dimming the prospect of an imminent deal to reopen the Strait of Hormuz.
Germany's 10-year bond yield DE10YT=RR was up 2 basis points to 3.201%, after climbing 5 bps on Monday on the back of rising oil prices. Yields rise as prices fall and vice versa.
Trump on Monday said Iran should pay compensation for people killed in wars, attacks and protests, in response to Tehran's own demands for compensation and an end to sanctions.
