Global long-term bond yields surge to multi-decade highs amid inflation and geopolitical tensions

Long-term borrowing costs across major global economies surged to multi-decade highs on Tuesday, driven by renewed inflation fears, escalating Middle East tensions, and concerns over government debt levels and massive investments in artificial intelligence. The yield on the 30-year U.S. Treasury bond rose to 5.33%, its highest level since June 2007, while similar long-term debt in the United Kingdom reached 5.85%. In Japan, the benchmark 10-year government bond yield climbed to a three-decade high just under 3%, and Germany's 10-year Bund yield touched its highest point since 2011.

The primary catalyst for the bond market selloff was a sharp rise in oil prices, with Brent crude, the global benchmark, surpassing $90 per barrel. This increase followed the collapse of a ceasefire between the United States and Iran on Monday night, which had raised hopes for reopening the Strait of Hormuz. The waterway has been largely closed for nearly six months due to the conflict, disrupting global oil supply. Tensions were further heightened by President Donald Trump's threat to bomb Oman, a U.S. ally, if it interfered with negotiations to reopen the strait. Rising oil prices raise the cost of...