Eurozone Bond Yields Surge as Oil Prices Climb Amid US-Iran Tensions

European government bond yields rose on Monday as rising oil prices and concerns over the US-Iran conflict fueled inflation and interest-rate worries. Germany's 10-year yield, a benchmark for the eurozone, increased to its highest level since June 2009, reaching 3.6303%. The yield has risen by more than 30 basis points in September alone.

The European Central Bank (ECB) has already raised interest rates twice this year to combat inflation, and markets are pricing in at least one further increase by the end of the year. Investors are now turning their attention to flash inflation data due later this week, which is expected to show a 3.6% September inflation rate, up from 3.2% in August.

The higher energy prices, combined with expectations of tighter monetary policy, have weighed on government bonds globally in recent months. The Strait of Hormuz has been at the center of tensions between the US and Iran, with President Donald Trump rejecting an Iranian proposal over the weekend to reopen the strategic waterway.