Oil Surge and Global Bond Selloff Deepen Inflation Risk After Renewed US-Iran Strikes

New York and London, 2 September 2026 – Global government bonds extended their selloff while oil climbed to five-week highs after renewed United States strikes on Iran revived fears of a wider Middle East conflict and another inflation shock. The combination of higher energy costs, rising sovereign yields and weaker equities presents a difficult backdrop for Asian investors already assessing whether major central banks may tighten policy again.

The benchmark US 10-year Treasury yield rose 3.4 basis points to 4.792% after touching 4.798%, its highest level since January 2025. It marked a fifth consecutive session of increases, the longest such run since March. Japan’s 10-year government-bond yield reached 3% for the first time since 1996, while British and euro-area yields climbed to levels not seen in more than a decade. Because bond prices move inversely to yields, the adjustment represents a broad repricing of inflation and policy risk.