US-Iran Ceasefire Collapse Triggers Global Bond Sell-Off

The collapse of a 60-day ceasefire between the United States and Iran has triggered a global government bond sell-off, pushing borrowing costs to multi-decade highs. The instability was compounded by a projectile attack on a vessel in the Strait of Hormuz, which drove Brent crude oil prices above $90 per barrel and revived investor fears of long-term inflation.

US 30-year government bond yields rose past 5.31%, the highest level since June 2007. This surge coincided with the US federal debt balance approaching $40 trillion, raising concerns over the sustainability of national spending. Similar spikes in 30-year yields were reported in Germany and France, while global stocks declined, with the Nasdaq 100 shedding more than 1% as investors exited technology positions.

Financial analysts warn that the United Kingdom is disproportionately vulnerable to this shock. Nigel Green, CEO of deVere Group, noted that Britain's high public sector debt—approximately 95% of GDP—and the high volume of inflation-linked gilts increase the government's interest bill during oil shocks. This leaves the Bank of England facing a conflict between cutting rates to support weak economic growth or raising them to combat oil-driven inflation.