Middle East conflict drives up oil prices, German bond yields rebound to 2.97%

(1) The yield on Germany's 10-year government bonds rose to 2.97%, rebounding from the six-week low reached on Monday, as renewed Middle East conflicts dampen market sentiment and drive up Brent crude oil prices. (2) Regarding monetary policy, European Central Bank official Isabel Schnabel stated that even if a peace agreement is reached, the central bank should raise interest rates in June, citing the scale and persistence of the energy shock. (3) The currency market currently expects a 90% probability of a rate hike in June and anticipates a tightening of about 60 basis points by the end of the year, which means at least two 25-basis-point increases.