Bond Yields Soar to Multi-Decade Highs Amid US-Iran Tensions

Global bond yields have surged to multi-decade highs as tensions between the US and Iran drive up oil prices, fueling inflation fears. The yield on the benchmark 30-year US Treasury bond climbed to 5.327%, its highest level since June 2007.

The 10-year Treasury yield rose to around 4.74%, while Japan's 10-year government bond yield reached a three-decade peak of 2.945%. In Europe, Germany's 10-year Bund yield touched its highest since 2011, France's equivalent hit a 16-year high, and Britain's long-dated borrowing costs approached levels last seen in 1998.

Kjersti Haugland, chief economist at DNB Carnegie, said the shift in investor sentiment marks an era where inflation and rates outlook is more uncertain, with greater upside risks. She attributed this to the very high level of government debt in many countries, particularly Japan, the US, France, and the UK.

The immediate catalyst for the move was the collapse of ceasefire talks between Washington and Tehran on Monday night, which led to a surge in Brent crude prices above $91 per barrel. Analysts point to competition for capital from artificial intelligence hyperscalers as a leading factor pushing up yields.