Global bond markets tumbled Tuesday as investors fled to safety amid rising inflation fears stemming from the Iran conflict. The 5.18% yield on the 30-year U.S. Treasury note reached its highest level since 2007, reflecting growing anxiety about oil supply disruptions and potential Fed policy shifts. Bond yields move inversely to prices, meaning the sell-off pushed borrowing costs sharply higher worldwide.

Elevated yields spread across international markets, with Canada, Germany, France, and Japan all seeing multi-year highs. Japan's 30-year bond yield hit an unprecedented 4.13% as energy prices strain its struggling economy. Investors fixated on the Strait of Hormuz blockade, which had previously channeled a fifth of global oil supplies to Asia and Europe. The Trump administration faces mounting pressure as rising borrowing costs complicate its economic priorities.

The surge in Treasury rates directly impacts consumers and businesses, pushing the average 30-year mortgage rate to 6.36% from below 6% before the war. Unlike last year's tariff turmoil, Trump shows less willingness to back down on Iran despite market turmoil. While the stock market has risen seven consecutive weeks, bond investors remain fearful, with many believing conditions will worsen before improving. The Fed's expected rate cuts have been scaled back to minimal increases.