Global bonds set for biggest monthly decline in years
Global bond prices face their largest monthly fall in years as the Iran war fuels stagflation fears. High oil prices weigh on growth and inflation outlooks.
Global government bond prices are on track for their most significant monthly decline in years as investors weigh the risks of a prolonged conflict involving Iran. The geopolitical tension has fueled fears of stagflation, a scenario where high inflation persists alongside slowing economic growth. While the aggressive selling of short-dated, rate-sensitive bonds has begun to ease, markets across the United States, Europe, and Asia are still nursing heavy losses.
The two-year Treasury yield in the United States is poised for a monthly increase of approximately 50 basis points, marking its sharpest rise since late 2024. This shift comes as market participants abandon previous assumptions that the Federal Reserve would implement multiple interest rate cuts this year. The benchmark 10-year Treasury yield has also climbed significantly, rising 44 basis points over the month to reach roughly 4.39%.
