Bond yields climbed to four-week highs Wednesday as Middle East tensions reignited oil-price fears. The 10-year U.S. Treasury yield reached 4.565%, Germany's Bund yield hit 3.044%, and the U.K. gilt yield touched 4.909%. Brent crude jumped 2.3% to $75.85 a barrel.

The spike follows Iran's attacks on shipping near the Strait of Hormuz and U.S. airstrikes that blocked Iran's legal oil exports. Iran responded with counterattacks, threatening an interim peace deal. KBC Bank analysts noted the "fragility of the talks" and "how deep the water between the parties still is."

Higher oil prices risk reigniting inflation concerns, potentially pushing the Federal Reserve and European Central Bank to maintain or raise interest rates. Tickmill Group strategist Patrick Munnelly called the escalation a "live inflation shock" after the risk premium had been fading.

For investors, the move signals that geopolitical risk is no longer priced out of fixed income. If oil sustains above $75, central banks face a harder path to rate cuts, keeping upward pressure on yields across the U.S., German, and U.K. curves.