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The yield on 30-year US Treasury bonds reached 5.6%, on Tuesday, marking its highest level since 2004, coinciding with rising inflation fears following the surge in oil prices and increasing expectations of a US interest rate hike.
The yield on these bonds was driven up by rising inflation fears due to higher oil prices caused by the US war on Iran.
This comes amid expectations regarding the path of US interest rate hikes, along with selling movements by investors in the bond market, as bond prices typically fall leading to higher yields.
Oil prices are experiencing severe fluctuations amid escalating tensions between the United States and Iran and concerns about disruptions in oil supplies through the Straits of Hormuz and Bab al-Mandeb.
Energy and bond market movements come as markets are closely following developments in the war on Iran and its potential impact on inflation and US monetary policy.
On February 28, 2026, the United States and Israel launched a war on Iran, resulting in thousands of deaths. Tehran responded with attacks on Israel and US sites in the region, before a ceasefire agreement was reached in April last year.
Later, the United States launched attacks on sites in Iran, amid stalled negotiations between the two countries due to disagreements over navigation in the Strait of Hormuz, despite signing a memorandum of understanding in mid-June last year.
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