European Bonds Jump as Energy Prices Drop on Iran Ceasefire

German and UK bonds surged after energy prices sank following a ceasefire between the US and Iran, prompting traders to slash bets on rate hikes this year.

Yields on 10-year bunds and gilts tumbled to a three-week low after the US and Iran agreed to a two-week truce, which includes Tehran allowing ships to pass through the Strait of Hormuz. Traders aggressively pared wagers on interest-rate rises and now see the European Central Bank delivering two quarter-point increases and the Bank of England just one increase this year.