US Treasury yields climbed Wednesday morning after ADP reported private employers added 122,000 jobs in May, exceeding the expected 110,000. The stronger-than-forecast employment data reinforced expectations for continued economic resilience, while escalating Middle East conflict added upward pressure on oil prices and inflation concerns.

The 10-year Treasury yield rose to 4.483% and the two-year yield increased to 4.082%, pushing the dollar index up 0.1% to 99.342. Renewed US-Iran hostilities kept energy markets volatile, with Brent crude climbing 1.8% to $97.73 a barrel. These developments suggest inflationary pressures may persist longer than previously anticipated, complicating central bank policy decisions.

European markets followed suit as eurozone bond yields rose across the board. The 10-year German Bund yield climbed to 2.998% while UK gilt yields jumped 3.8 basis points to 4.896%. Eurozone headline inflation held at 3.2% in May, but core inflation accelerated to 2.5%, slightly above expectations and raising fresh concerns about persistent price pressures.

The bond market selloff has made US Treasurys the worst-performing global fixed income asset this year, returning flat through May. Emerging market debt led gains with a 4.05% return, while global high-yield bonds managed just 1.94%. The combination of resilient labor markets and geopolitical uncertainty creates a challenging environment for fixed income investors.