Greek bond yields climb amid market tensions

Bond markets across all Eurozone countries have been under pressure since the beginning of the week, following the outbreak of war in Iran. The market is reacting to the escalation of the conflict in the Middle East and the war with Iran, amid fears of a renewed surge in inflation. Rising oil prices due to the conflict are fueling concerns of a new wave of inflation in Europe, which remains heavily dependent on energy imports.

Under these circumstances, investors no longer see significant likelihoods of interest rate cuts by the European Central Bank (ECB) in 2026. Instead, markets are now pricing in a potential rate hike by July or December 2026 to counter inflationary pressures.

ECB President Christine Lagarde stated on Thursday, 5 March 2026, that the ECB is closely monitoring incoming data without a predetermined stance, deciding “meeting by meeting” depending on the impact of energy shocks.

The effects of these developments are also reflected in the yield of the German 10-year government bond, which exceeded 2.85% within a single week, marking the largest weekly increase over the past year.

In the domestic Greek market, significant sell-offs have been observed in recent days, putting pressure on bond prices and pushing yields higher.

Notably, on the Greek Government Bond Electronic Trading System (Hellenic Bank of Greece – HDAS) alone yesterday, out of €200 million in transaction value, €110 million consisted of sell orders. The yield on the 10-year Greek government bond reached 3.46%, up from 3.30% at the start of the week. The spread over equivalent German 10-year bonds widened slightly to 0.62% from 0.59%.

Regarding the upcoming review by the Canadian rating agency DBRS Morningstar, the market expects that the agency will maintain Greece’s credit rating at BBB.

The last assessment of the Greek economy by DBRS Morningstar took place on 5 September 2025, confirming the country’s creditworthiness at BBB and maintaining a “stable” outlook for the economy.