US-Iran Tensions Push Oil Prices Higher as Bond Yields Soar

Oil prices climbed higher on Tuesday as a US-Iran ceasefire expired and Tehran announced it would shift to a 'fully offensive' military posture. The rise in oil prices pushed up bond yields, with the yield on the U.S. 10-year Treasury bond increasing by 0.8 basis points to 4.728%. This marks a significant increase for the US economy, which has been under pressure due to soft economic data and an unexpected drop in retail sales.

The recent global selloff in bonds deepened with the yield on the 10-year Japanese government bond rising by 2.5 basis points to 2.945%, its highest level in over three decades. The S&P 500 slipped 0.5% overnight on Wall Street, while the Nasdaq Composite edged 0.3% lower.

Markets adopted a risk-off tone as President Trump reaffirmed he was not interested in extending the truce with Iran, and renewed tensions in the Middle East pushed oil prices higher. Oil traders are now focused on global supply worries, which have driven up prices by over $2 since Monday.