US-Iran Conflict Triggers Global Bond Selloff and Energy Price Surge

Renewed tensions in the Middle East have triggered a global selloff in bond markets and energy prices, causing widespread losses across equities. The US-Iran conflict has disrupted oil shipping through the Strait of Hormuz, driving Brent crude to $95.61 per barrel and diesel prices to their highest level in over four months.

The surge in energy prices is exacerbating inflationary pressures, prompting central banks to raise expectations for rate hikes. The Federal Reserve's implied probability of a September rate hike has risen to 70%, while the European Central Bank has a 65% chance of hiking rates on September 10.

Bond markets are facing their most violent selloff in decades, with sovereign yields spiking to multi-year highs. The US 10-year Treasury yield climbed to 4.81%, Japan's 10-year JGB yield breached 3%, and Australia's 10-year yield rose to 5.25%.

Tech stocks are under pressure due to the selloff, with large-scale financing activity in the sector lifting yields across the curve. Market strategists warn that higher yields pose a clear headwind for Asian equities, particularly longer-duration tech stocks.