Bonds: “Higher inflation and higher yields”

The ceasefire in Iran is fragile, and market uncertainty remains high. It is said that inflation will rise, at least in the short term, making higher interest rates necessary. German government bond yields are already at a 15-year high.

April 10, 2026. FRANKFURT (Deutsche Börse). With the ceasefire in the Middle East, oil prices have fallen slightly—and with them, inflation expectations and yields. However, there is no sign of any real easing of tensions. According to LBBW analyst Matthias Krieger, the energy-driven rise in inflation could well continue. “A real end to the conflict is still not in sight, and there is also a high risk that even after the fighting ends, the global market for oil and LNG will remain under pressure for quite some time,” he explains. Whatever the financial markets may be doing in the short term: as long as the Strait of Hormuz remains closed to most ships, there will be no respite. “The strait is simply too important for the world’s energy supply.”

The yield on 10-year German government bonds had risen to 3.13 percent at one point; as of Friday noon, it stands at 3.03 percent—still the highest level in 15 years.

Significantly higher key interest rates expected

Overall, expectations regarding monetary policy have shifted significantly upward amid the war in Iran. According to an aggregate indicator compiled by Bloomberg Economics, the outlook for key interest rates in industrialized nations by year-end is now about 35 basis points higher than it was three months ago.

Today, Friday, all eyes are on the U.S. U.S. consumer prices for March will be released this afternoon. “In the short term, the sharp rise in energy prices is causing the inflation rate to spike,” says Commerzbank analyst Bernd Weidensteiner. If the conflict is indeed resolved, relief will soon follow. However, interest rate cuts are not expected for the time being.