Germany’s 10-year Bund yield extended its decline below 3% as investors scaled back expectations for ECB rate hikes in 2026, with optimism over a potential US-Iran peace deal pushing oil prices lower and easing inflation concerns. Money markets now expect the ECB’s deposit facility rate to reach around 2.6% by December, reflecting two fully priced hikes and a possible third, with a 75% chance of a first rate increase in June. On Wednesday, ECB board member Piero Cipollone said the likelihood of a rate hike had risen due to high inflation pressures, echoing similar remarks from other policymakers earlier this month. According to Axios, the White House is close to a one-page Memorandum of Understanding with Iran to end the conflict and begin nuclear negotiations, the closest the parties have been to a deal since the conflict started. Tehran is expected to respond within 48 hours, though no agreement is finalized.