Bonds: Inflation fears push yields higher

In most cases, federal bonds, which are considered safe, are in demand during a crisis, and yields fall. However, the war with Iran has caused yields to rise. This is because higher inflation is now expected—and, as a result, key interest rates are likely to rise. 

March 6, 2026. FRANKFURT (Deutsche Börse). Despite the attack by Israel and the US on Iran, there is no sign of a flight to safety. “Unlike in previous crises, investors clearly no longer see US Treasuries and German government bonds as safe havens,” notes Commerzbank analyst Christoph Balz. “The market now expects inflation to rise due to the increase in oil and gas prices and the ECB to raise interest rates rather than lower them,” reports bond trader Arthur Brunner of ICF Bank.

Ten-year German government bonds yielded 2.86 percent on Friday morning, up from 2.70 percent the previous week. Yields on US Treasuries have also risen recently. Ten-year bonds are now yielding 4.15 percent, up from 4 percent a week ago.

Only weak and short-term effects on inflation?

“Many market participants believe that the ECB will raise key interest rates before the end of this year,” explains Ulrich Kater of DekaBank. However, he assumes that the impact on inflation in the eurozone will remain too small and too temporary. “As soon as the situation on the oil and natural gas markets begins to ease, the still high demand for investment will cause yields on German government bonds to fall again.”