Bond sell-off intensifies around the world as oil prices rise above $91 a barrel, stoking inflation fears – business live
Global government bond markets are selling off sharply, driving yields to fresh highs, after oil prices climbed above $91 a barrel amid renewed fighting in the Middle East. The US and Iran exchanged fire for the first time in a month, with Iran targeting American bases in Jordan and the UAE after strikes on Iranian rocket launchers near the Strait of Hormuz, while Donald Trump vowed further retaliation. The combination of rising oil prices and escalating conflict has stoked fears of higher inflation, unsettling bond markets and pushing borrowing costs higher across major economies.
Brent crude rose 0.7% to $91.13 a barrel and US WTI gained 0.77% to $86.42. Japan's 10-year government bond yield hit 3% for the first time in a generation, the US 10-year Treasury yield rose to 4.78% (its highest since early 2025), and the UK 10-year gilt yield edged up to 5.14%. Traders now expect interest rate rises in New Zealand this week and from the European Central Bank later in September, with better-than-even odds of hikes in the US and Japan too, while European and Wall Street stock futures pointed lower and Shein's Hong Kong stock market debut saw shares close 4% below their offer price.
- Oil above $91 a barrel and Middle East tensions fuel inflation fears
- Bond yields hit multi-year/decade highs in Japan, US and UK
- Rate hikes expected soon in New Zealand, ECB, possibly US and Japan
New here? Start with this
Global bond markets are the huge pools of debt issued by governments to fund their spending, and the "yield" is essentially the interest rate investors demand to hold that debt. When yields rise sharply and quickly across many countries at once, as they have here, it usually signals that investors are worried about inflation eroding the value of their returns, and it makes borrowing more expensive for governments, businesses and, eventually, ordinary mortgage holders.
The trigger this time is a jump in oil prices, driven by a flare-up in hostilities between the United States and Iran. Oil is a key ingredient in the cost of almost everything, from petrol to shipping, so a sustained rise tends to push up prices across the economy, which is why traders are now betting that central banks such as the Bank of Japan, the European Central Bank and the US Federal Reserve may need to raise interest rates sooner or further than expected.
This matters because higher government borrowing costs and interest rate expectations ripple outwards, affecting everything from mortgage rates and business loans to stock market valuations, and can slow economic growth if sustained. The story sits at the intersection of geopolitics in the Middle East and the everyday financial conditions that shape household and business costs worldwide.
Art Business Celebrity Culture Economy Entertainment Fashion Markets Middle East World