Global Bond Rout Deepens as Inflation Fears Mount

Bonds from Tokyo to New York extended losses as rising energy prices from the ongoing Middle East conflict fueled inflation fears and increased investor bets on rate hikes by global central banks, Reuters reported.

The two-year yield touched a 14-month high of 4.1020%, while the 30-year US Treasury yield rose to a one-year peak of 5.1590%.

Benchmark 10-year US Treasury yields, which move inversely to prices, jumped to their highest level since February 2025 in early Asia trading at 4.6310%, after climbing more than 20 basis points last week.

The two-year yield touched a 14-month high of 4.1020%, while the 30-year US Treasury yield rose to a one-year peak of 5.1590%.

The moves followed a surge in oil prices, as efforts to de-escalate the Iran–UAE conflict appeared to stall after reports of a drone strike near a nuclear facility in the United Arab Emirates (UAE).

Analysts at OCBC said: “Fresh drone attacks on the UAE’s Barakah nuclear plant and Saudi territory, coupled with Trump’s ‘clock is ticking’ ultimatum and a planned Situation Room meeting, have sharply elevated the risk of renewed full-scale hostilities.”