theguardian.com 11 days ago URGENCY: 7/10
Bond Market Rout: Inflation Fears Surge
The bond market is facing a significant rout as inflation fears escalate due to the ongoing Iran war. Discover how rising yields are impacting global borrowing costs and what this means for central banks worldwide.
The Current State of the Bond Market
The bond market is experiencing a tumultuous phase, with fears of an inflation shock stemming from the Iran war. This ongoing sell-off is driving up borrowing costs for governments globally, from Tokyo to Washington DC.
Last week, yields soared, with Japan's 30-year bond hitting 4% for the first time. The situation is exacerbated by the closure of the Strait of Hormuz, leading to potential shortages in oil and gas, which could further inflate energy, transport, and food costs.
- Key points to consider:
- US Treasury yields reached their highest since February 2025 at 4.6310%.
- Japan's 30-year bond yield hit a record 4.200%.
- Analysts predict continued rate hikes from the Bank of England and European Central Bank in June.