U.S. Treasury yields edge higher but retreat from peaks as markets absorb a new phase of military escalation in the Middle East. The 2‑year Treasury yield rises 1 basis point to 4.216%, having hit 4.239%—the highest since February 2025—while the 10‑year yield is up 0.2 basis points at 4.570%. The DXY dollar index stays steady at 100.943 after earlier gains.

European bonds follow U.S. moves. The 10‑year Bund climbs 1.5 basis points to 3.057%, and Italian BTPs rise 2.5 basis points to 3.840%. In the U.K., 30‑year gilt yields rise 2.7 basis points to 5.637% as Brent oil climbs 2.6% to $77.98 after U.S. strikes on Iranian targets and Iranian attacks on vessels in the Strait of Hormuz.

Analysts warn of continued volatility. Commerzbank’s Rainer Guntermann notes potential pressure on German Bunds from renewed Middle East confrontation and upcoming U.S. CPI data and Kevin Warsh testimony. Blue Bay’s Mark Dowding cautions possible weakness in French OATs before next year’s presidential election.

Overall, bond markets remain sensitive to oil price swings and geopolitical risk, with expectations of tighter monetary policy amid rising inflation fears.