Eurozone government bond yields moved higher on Monday as renewed military escalation between the United States and Iran intensified concerns over global inflation. Meanwhile, oil prices surged after Tehran announced another closure of the Strait of Hormuz, Reuters reported.The latest exchange of missile and drone attacks between U.S. and Iranian forces has cast fresh uncertainty over the interim agreement signed between the two countries last month. The deal had aimed to reopen the strategically vital Strait of Hormuz and pave the way for a broader peace settlement following a 60-day negotiation period.Germany's benchmark 10-year government bond yield rose 2.3 basis points to 3.0568%. The move extended last week's sharp rise of around 10 basis points, marking the largest weekly increase since early June, as investors reassessed inflation and interest rate expectations amid heightened geopolitical risks.The resurgence in tensions reversed the earlier optimism that had emerged from hopes of easing conflict in the Middle East and lower energy prices, which had helped calm concerns over the global economic outlook.Oil prices also advanced sharply, adding to inflation worries. Brent crude futures climbed 3.8% to $78.94 a barrel, moving above levels seen before the latest conflict, though remaining below the highs recorded in April, according to Reuters.Shorter-dated euro zone bonds also came under pressure. Germany's two-year bond yield, which is particularly sensitive to monetary policy expectations, rose 3.3 basis points to 2.6817%. The yield had already posted its biggest weekly increase since early June during the previous week.Money markets modestly increased their expectations for further monetary tightening by the European Central Bank. Investors were pricing in around 38 basis points of additional tightening by the end of the year, suggesting one more 25-basis-point interest rate hike with roughly even odds of another increase.Beyond developments in the Middle East, market participants are also preparing for a busy week of economic events. The investors are closely monitoring sovereign bond supply in Europe alongside major U.S. economic releases, including June consumer inflation data, which could influence expectations for future central bank policy.The combination of geopolitical uncertainty, rising energy prices and key economic data releases is expected to keep volatility elevated across global bond markets in the coming days.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)