US-Iran Tensions Spark Global Market Sell-Off and Oil Price Surge

Global markets experienced a downturn on Wednesday due to escalating tensions between the US and Iran. The Strait of Hormuz was hit by fresh US airstrikes, while Tehran targeted US assets across the region. This marked one of the most significant exchanges of fire in weeks.

The increased fear of disruption to energy supplies led to a surge in oil prices, with Brent crude futures reaching $94.87 per barrel. The recent rise in energy prices had already put upward pressure on bond yields, which were already on the rise due to fiscal concerns, according to Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.

The yield on the 10-year US Treasury bond rose to an intraday high of 4.8122%, its highest level in almost three years. The yield on the 10-year Japanese government bond held above 3% for a second straight session after hitting a three-decade high earlier this week.

The U.S. dollar index, which measures the greenback against a basket of six currencies, was up 0.05% at 99.734, near its highest since August 17. Ganesh noted that there's much more scope for downward surprises for the dollar than there is for some other currencies.