Global Bond Yields Hit Multi-Decade Highs Amid Middle East Tensions

Global bond yields have surged to multi-decade highs amid concerns over war in the Middle East and its potential impact on oil prices and inflation. Japan's benchmark 10-year government bond yield jumped more than six basis points, reaching a 30-year high of 3% on Tuesday.

The US 10-year Treasury note also rose to a 20-month high following Federal Reserve chief Kevin Warsh's hawkish speech at Jackson Hole on Friday. He stated that the central bank has 'work to do' if inflation doesn't cool down.

UK bond yields have increased, with the 10-year government bond rising over nine basis points to 5.2341%, its highest level since June 2008 during the Global Financial Crisis. Germany's 10-year bund also rose to a 12-month high, while France's two-year government bond yield touched its highest level since April 2024.

The increase in borrowing costs has raised concerns about higher mortgage rates and business and consumer loans. The recent flare-up between the US and Iran has pushed energy prices higher, with Brent crude rising 1.5% to $92 a barrel on Tuesday.