Iran signaled it could reopen the Strait of Hormuz if the US eases military
pressure, prompting oil prices to fall and pushing euro-area bond yields lower
for a second session to near two-week lows. Germany's 10-year bund yield, the
euro-area benchmark, briefly rose 4bps at the open then fell 1bp to 3.441%. On
Monday it had dropped 7bps to its lowest level since Sep 10. Yields had risen in
recent weeks as markets priced further central bank tightening to counter
energy-driven inflation; traders now price about 35bps more ECB tightening this
year, down from 40bps expected on Friday. Rabobank senior rates strategist Lyn
Graham-Taylor said Iran comments drove oil down, weighing on yields.
