Government bond markets around the world buckled on September 1 as renewed fighting between the US and Iran sent oil prices sharply higher and revived fears that central banks will have no choice but to keep raising interest rates. The US 10-year Treasury yield climbed to roughly 4.78%, its highest level since January 2025, while counterparts in Japan, Germany, and the UK all hit their own milestones of pain.
A synchronized global sell-off
Japan’s 10-year JGB yield pushed toward 3%, a level the country hasn’t seen since 1996. Germany’s 10-year Bund yield surged to 3.36%, a 15-year high, while UK gilt yields blew past 5.25%, their steepest ascent since the 2008 financial crisis.
Brent crude oil jumped roughly 2% to 4% on the day, trading between $91 and $94 per barrel. The spike came after the first direct clashes between US and Iranian forces in over a month, reigniting concerns about supply disruptions through the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world’s oil passes daily.
Rate hike expectations climb
