Bond Yields Soar as Fed Decision and Oil Prices Fuel Inflation Concerns

The euro zone bond yields rose on Thursday in response to the Federal Reserve's decision to hold interest rates steady and an increase in oil prices, driven by tensions between the U.S. and Iran.

Longer-dated bond yields climbed significantly after the 30-year U.S. Treasury yield reached a 19-year high overnight following the Fed's decision, which was led by new chair Kevin Warsh. Analysts noted that the rise in long bond yields indicates traders are skeptical about the Fed's commitment to reducing price pressures.

Germany's 10-year bond yield, the benchmark for the euro zone, rose 1 basis point to 3.17%, while Germany's 30-year bond yield increased by 3 basis points to 3.664%. The rise in oil prices added to the upward pressure on bond yields as traders factored in the possibility of stronger inflation.

The U.S.-Iran conflict continues to escalate, with a drone hitting a U.S.-owned gas storage tanker at Egypt's Mediterranean port of Damietta, according to British maritime security firm Ambrey. Brent crude rose 2% to $92.90 a barrel.