Bond Yields Soar as US-Iran Conflict Escalates

The global financial market is facing new challenges as bond yields hit historic highs due to the ongoing conflict between the US and Iran. The yield on the US 10-year Treasury bond reached an intraday high of 4.8122%, its highest level in almost three years, while the Japanese government bond yield surged to levels not seen in three decades.

The renewed Middle East conflict has added fuel to the inflation fire, undermining the appeal of fixed-income assets. Bond investors are demanding higher compensation due to governments running large deficits, making it a challenging time for global debt markets.

Japan's rising yields could reduce overseas bond demand from Japanese investors, further tightening financial conditions. The Bank of Japan officials' comments ahead of their September 17-18 meeting added to pressure on bond markets, with Governor Kazuo Ueda vowing to continue raising rates.