Global Bond Sell-Off Sends Stocks Plunging Amid Fears of Monetary Tightening

A wave of bond selling deepened across several major economies worldwide, driving up government borrowing costs sharply and triggering stock market declines, as investors worried that inflation fueled by rising energy prices would force central banks to raise interest rates.

The latest round of tensions between the United States and Iran pushed oil prices higher, reinforcing fears of tighter monetary policy that could negatively impact economic growth.

Intense selling pushed the yield on 30-year British government bonds to their highest level since 1998, while the 10-year bond yield jumped to a level not seen since the global financial crisis of 2007–2008. In Japan, the 10-year government bond yield touched 3 percent, its highest in 30 years, amid concerns over massive government spending plans.

The yield on 30-year U.S. Treasury bonds reached 5.27 percent, a level close to those last recorded in 2007, while the 10-year yield rose to its highest since January 2025.

“The main factor was the escalation of tensions in the Middle East over the weekend, when the United States and Iran exchanged strikes for the first time since late July,” he added.

European stocks fell sharply, with the Frankfurt index dropping more than 1 percent, and London stocks declining as trading resumed after a public holiday.

Official data showed inflation in the euro area rose to a three-year high of 3.3 percent in August, bolstering expectations that the European Central Bank will raise interest rates next week.

Oil prices surged nearly 2 percent after the United States and Iran exchanged fire for the first time in weeks, with U.S. President Donald Trump threatening to strike Iran “with force.”