The global bond rout is accelerating. Here’s what to know.

A weekslong decline in government bonds has accelerated, driving U.S. Treasury yields to their highest levels since early 2025. The 10-year Treasury yield reached 4.687% on Tuesday, while the 30-year yield climbed to an 18-year high near 5.2%, contributing to the S&P 500’s first three-day drop since March. Tech and industrials stocks have been hardest hit, both declining over 1.5% this week. The bond selloff is primarily tied to the U.S.-Iran conflict, which has disrupted shipping through the Strait of Hormuz and pushed oil prices 60% higher than pre-war levels. Investors now expect the Federal Reserve to raise interest rates later this year, reversing earlier expectations of rate cuts. Initial optimism following President Trump’s April 7 cease-fire announcement has faded as both sides appear entrenched, with the U.S. imposing its own embargo on Iranian ports and vessels. Market reactions reflect lessons from 2022, when rising inflation led to a sharp bond selloff as the Fed aggressively hiked rates from near zero to over 4%. Investors remain cautious about dismissing inflation as temporary, fearing a repeat of that volatility. Priya Misra, a fixed-income manager at J.P. Morgan Asset Management, noted that the 2022 experience dominates discussions, with investors wary of underestimating inflation risks. Global fiscal concerns are also elevating yields. Japan’s bond yields have surged due to expectations of increased borrowing to offset higher energy costs, while U.K. yields rose amid speculation of a leadership challenge to Prime Minister Keir Starmer. Higher yields abroad typically push U.S. yields upward as investors seek higher returns elsewhere. The bond rout has dampened stock market gains, particularly in sectors sensitive to borrowing costs. With inflation expectations rising and geopolitical tensions persisting, investors are recalibrating their expectations for central bank policies and economic growth.