Bonds: “Price Gains—Thanks to a Tailwind from Oil Prices”

The sharp drop in oil prices is dampening inflation expectations in the market. The result: falling yields and rising stock prices. In addition, SpaceX issued a record-breaking bond this week.

June 26, 2026. FRANKFURT (Deutsche Börse). Nervousness on the stock markets due to AI concerns, while bond markets have eased. “The bond markets are benefiting from the volatile stock markets,” reports Arthur Brunner of ICF Bank. In addition, concerns about inflation and interest rate hikes have subsided due to the drop in oil prices.

Bond prices rose this week, and yields have fallen significantly. Ten-year German government bonds were yielding 2.84 percent on Friday morning, down from 2.97 percent a week ago. “Even more striking is that the much-watched yield on 30-year U.S. Treasuries has slipped back well below 5 percent to 4.85 percent,” notes Brunner.

However, concerns about inflation and interest rate hikes are not entirely off the table yet. “The U.S. inflation data for May released yesterday showed that price pressures in the U.S. increased significantly prior to the recent easing of tensions in the Middle East conflict,” reports LBBW analyst Sandro Pannagl. At the very least, though, the figures did not indicate a stronger-than-expected acceleration.

British Yields Fall Even Further

Yields on British gilts fell even more sharply, as Commerzbank analyst Pascal Reichert notes. “The falling oil price was compounded by Prime Minister Keir Starmer’s resignation. His likely successor, Andy Burnham, had already signaled in the run-up to the election that he did not intend to adjust the existing budget rules,” he explains. Bond markets are thus increasingly pricing in the political uncertainty in the UK. Ten-year gilt yields, which peaked at over 5 percent in mid-May, are now below 4.7 percent.

“Trading volumes modest due to the summer season”