Bank of France: The cooling of German bond yields and expectations for the European Central Bank reflect optimism about the situation in the Middle East.

The interest rate strategist of France's Societe Generale wrote in a report that the decline in German bond yields and the cooling of market expectations for a rate hike by the European Central Bank reflect optimism about the normalization of the situation in the Middle East. They stated that this "is more due to the market's focus on the normalization of the Middle East conflict rather than a change in fundamentals." These strategists indicated that the key barometer for the market is the price of crude oil, with Brent crude oil prices at $74 per barrel, more than 20% lower than at the European Central Bank's last meeting on June 11. Data from the London Stock Exchange Group shows that the money markets currently reflect slightly more than one rate hike expectation. The European Central Bank raised interest rates by 25 basis points at the last meeting.