Long-dated bonds tumbled Friday, pulling stock markets lower as fears of an inflationary shock from the Iran conflict intensified. The 30-year US Treasury yield surged to 5.12%, while the 10-year hit 4.58%—its highest in nearly a year—as government borrowing costs spiked globally.

The bond market sell-off follows the worst US wholesale inflation report since 2022, prompting traders to fully price in a Federal Reserve rate hike by March. JPMorgan Asset Management's Priya Misra called it a "perfect storm" for rates, with energy shocks compounding inflation concerns.

Japanese 30-year yields breached 4% for the first time ever, while UK gilts hit 5.86%—their highest this century. Brent crude rose 2.2% to $108.14 a barrel, up 50% since the US-Israeli strike on Iran, as the Strait of Hormuz closure fuels supply fears.

Equities reflected the mounting pressure, with the S&P 500 down 0.9% and Nasdaq falling 1.3%. Barclays' Emmanuel Cau noted investor disappointment that the Trump-Xi summit failed to address reopening the vital shipping corridor, leaving markets hostage to oil prices.