Bond yields jumped on Tuesday as the prospect of higher oil prices stemming from uncertainty in the Middle East pushed borrowing costs in the United States, Germany, Japan and elsewhere to multiyear highs. Investor unease could also be seen in stock markets, which fell around the world.
A shaky cease-fire between the United States and Iran officially ended on Monday, dimming the prospects for a reopening of the Strait of Hormuz, a critical waterway for shipments of oil and gas from the Persian Gulf. The fighting has also expanded to the Red Sea, where Iranian-backed Houthi militants have launched attacks on ships around another choke point for Middle Eastern oil.
The escalating war has pushed up oil prices, stoking fears that already stubborn inflation will remain elevated. That has added to worries about government debt and deficits and the enormous spending and borrowing by companies building artificial intelligence systems.