Global bond yields surged Tuesday as U.S.-Iran tensions drove oil prices higher, fueling inflation worries and rate-hike expectations. The 10-year U.S. Treasury yield hit 4.792%, its highest since January 2025. Japan's 10-year yield crossed 3% for a 30-year high, Germany's Bund reached 3.364% (since 2011), and U.K. gilt yields hit multidecade peaks.

Fed Chair Kevin Warsh's Jackson Hole remarks on "unfinished work" fighting inflation shifted market pricing to a 65% probability of a September 16 rate hike, up from one-third. Brent crude held above $90, last at $92.19. Analysts cited a "perfect storm" of energy-driven inflation, fiscal concerns, and heavy bond supply.

While Ronald Temple of Lazard Asset Management noted persistent inflation above the 2% target, Greg Gizzi of Nomura Asset Management International expects the Fed to hold in September, with hike odds rising for October or December. The yield surge complicates Treasury plans to lower borrowing costs via long-end buybacks.