Global Bond Yields Soar to New Highs Amid Energy Price Surge

Rising energy prices and US-Iran tensions have pushed global bond yields to new highs, sparking concerns about inflation.

The 10-year Japanese benchmark yield hit 3% for the first time in a generation, while the 10-year US Treasury yield reached its highest level since early 2025 at 4.78%. The French and German debt futures extended selling that earlier drove yields to 15-year highs.

Ryutaro Kimura, a senior strategist at BNP Asset Management in Tokyo, said there is 'a sense of resignation, tinged with helplessness' about rising interest rates. Higher oil prices and inflation worries are putting pressure on bond markets, just as Federal Reserve chair Kevin Warsh has reset expectations for the outlook.

The US and European equity futures dipped after Wall Street's modest Monday falls, with investors bracing for Friday's US jobs data that could open the door to an interest rate-hiking cycle starting as soon as this month. Wee Khoon Chong, Apac macro strategist at BNY, said 'the macro mix is turning more challenging for duration and risk assets' due to hawkish monetary policy, geopolitical risks, and rising fiscal concerns.