Bond Yields Soar as Iran War Strikes Send Energy Prices Surging

A new wave of strikes in the Iran war has sent energy prices surging again, fueling a selloff across world bond markets. Investors are bracing for a series of central bank interest rate rises this month.

The economically sensitive 10-year benchmark rates have seen rising government borrowing costs, with yields ripping across global stock markets too. The 10-year yield has hit its highest since 2023 at 4.8%, approaching the 5% level considered a major challenge to equities for mixed asset portfolio managers.

The Federal Reserve, European Central Bank, and Bank of Japan are all expected to raise interest rates this month. New Zealand's Reserve Bank was the first to act, with its second consecutive rate rise on Wednesday. However, another hike there is still in the mix, and dovish noises about what happens after that have knocked back the Kiwi dollar.