US-Iran Tensions Fuel Bond Yield Surge as Inflation Worries Rise

Global bond yields have surged to their highest levels in months as renewed tensions between the U.S. and Iran have fueled inflation worries, increasing the prospect of interest-rate hikes.

The 10-year U.S. Treasury yield rose to 4.798%, its highest since January 2025, according to LSEG data.

The two-year Treasury yield also jumped to 4.369%, a 19-month high, reflecting rising bets on an interest rate increase by the Federal Reserve in September.

One-year ahead U.S. inflation expectations have crept up to 2.5% from less than 2% in the past couple of months, according to derivative markets.