Dollar Surges as Iran Tensions Fuel Inflation Worries and Global Bond Selloff
The US dollar gained strength on Tuesday as tensions between the US and Iran escalated, fueling inflation worries and sparking a global bond selloff. The yen weakened past 160 per dollar for the third straight session, despite mounting pressure on the Bank of Japan to raise rates.
US President Donald Trump threatened further strikes against Iran after the first exchange of direct attacks in a month, pushing Brent crude futures above $92 a barrel and fueling inflation worries. The 10-year Japanese government bond yield touched 3% for the first time in 30 years, while the yield on 10-year Treasury notes hit its highest since January 2025.
US Treasury Secretary Scott Bessent said he believed Japan's government and central bank would take action that leads to a stronger yen. However, neither the jump in yields nor Bessent's comments were enough to arrest the yen's decline.