Iran-Israel war LIVE: Iran state TV reports explosions on island in Hormuz strait

Euro zone government bonds were mixed on Thursday (May 7, 2026) after staging their biggest ‌rally in a month the previous day, as investors grew optimistic that the U.S. and Iran might soon reach a deal to end the ⁠war.

Brent oil prices, which have been a driving force for broader financial markets since the war broke out in late February, were last down modestly below $100 a barrel on Thursday, having slid more than ‌10% the previous day on the back of the prospect of a U.S.-Iran peace deal.

With some concern about a damaging energy-price shock abating, bonds ‌held on to most of the gains made on Wednesday, when two-year yields, which ‌are ⁠most sensitive to expectations for inflation and interest rates, dropped sharply.

Two-year Schatz ⁠yields fell nearly 12 basis points on Wednesday, the most since April 8, and were last at 2.56%, roughly unchanged on the day.

-Reuters