Global bond yields rose to multi-decade highs Tuesday as escalating Middle East conflict drove oil prices higher and revived inflation fears. In Japan, the 10-year government bond yield hit 3% for the first time since 1996. In the UK, the 30-year yield reached its highest level since 1998.

Germany’s 10-year yield hit its highest since 2011. Oil prices jumped sharply, with Brent crude settling at $94.65 per barrel, its highest level in over a month, and WTI settling at $90.22, its first settle above $90 since July. Investors are dumping bonds, pushing yields higher, as they assess the outlook for inflation and central bank interest rates.

The 10-year US Treasury yield hit 4.8%, its highest level during President Donald Trump’s second term, while the 30-year yield reached 5.27%. Finance ministers and central bank governors from G20 countries are meeting in Asheville, North Carolina, amid the market turmoil. A deluge of corporate bond supply to fund the AI buildout has also added pressure on the bond market.

The sell-off underscores investors’ anticipation of higher rates from central banks as inflation risks increase. The rise in yields this week comes on the heels of Federal Reserve Chairman Kevin Warsh’s remarks at the annual Jackson Hole Economic Policy Symposium, when the Fed chief said inflation was "concerning." That has prompted investors to sell bonds as they reassess the odds of a rate hike at the US central bank’s upcoming meeting on September 15-16.