U.S. Treasury yields climbed to 4.374% on Thursday, as Iran’s proposal to reopen Hormuz Strait in exchange for lifting the U.S. port blockade faced sharp skepticism in Washington. Oil prices surged over 3%, driven by fears of prolonged Middle East tensions, while the Conference Board’s consumer confidence index is projected to drop in April. Markets reacted to President Trump’s reported dissatisfaction with Iran’s offer, with the 10-year yield jumping from 4.334% to 4.374% overnight.

The dollar index edged up 0.2% to 98.712, reflecting safe-haven demand amid stalled diplomacy. UK 10-year gilt yields hit a one-month high of 5.022% as lawmakers prepare to vote on investigating Prime Minister Keir Starmer over alleged procedural breaches in appointing former ambassador Peter Mandelson. Analysts warn political turmoil could trigger looser fiscal policies and higher public debt, amplifying global bond market volatility. Global long-term yields face upward pressure as Franklin Templeton CIO Sonal Desai highlights deglobalization trends and structural inflation risks. The Iran conflict, she argues, accelerates shifts toward energy security investments and defense spending, potentially deepening budget deficits in advanced economies. Market volatility persists as investors weigh geopolitical risks against central bank rate-cut expectations.

While short-term inflation shocks from Hormuz disruptions loom, long-term concerns about productivity-driven real rate increases dominate investor sentiment.