Bond Yields Surge as Oil Prices and Rate Hike Fears Unite

Global bond yields surged on Tuesday as oil prices and rate hike fears weighed on markets. Japan's 10-year benchmark yield hit 3% for the first time since 1996, pushing up government borrowing costs. The British and eurozone yields also reached over-10-year highs.

The jump in oil prices, which rose more than 2%, fueled concerns about inflation and potential interest rate hikes. US Treasury Secretary Scott Bessent said Washington was likely to announce bank sanctions against Iran this week, stepping up an attempt to 'economically asphyxiate' Iran's leadership after six months of conflict.

The data showed eurozone inflation rose back above 3% in August due to higher energy costs, bolstering the case for a September rate hike from the European Central Bank. Fed Governor Michael Barr said if inflation does not cool quickly, it will be time for the US central bank to increase interest rates.