Bond yields rise globally as U.S.-Iran attacks stoke inflation fears

Government bond yields rose across Europe and Asia on Monday as escalating U.S.-Iran hostilities lifted oil prices and stoked inflation fears, extending a selloff that began after President Donald Trump declared the ceasefire with Iran "over" at a NATO summit in Turkey last week.

Eurozone Yields Near Multi-Week Highs

Eurozone government bond yields remained close to multi-week highs on Monday, with The Wall Street Journal News Corp ↗ 3.52% reporting that yields rose as military escalation drove oil prices higher. The German 10-year Bund yield, the eurozone benchmark, had already climbed to 3.044% earlier in the week — a four-week high — while the U.K. 10-year gilt yield touched 4.909%. U.S. and Iranian forces exchanged heavy attacks over the weekend, according to MarketScreener, deepening global inflation concerns.morningstar+2

The bond selloff was driven by surging crude oil prices, which raise inflation expectations and make it more likely that central banks will tighten monetary policy. Money markets have been pricing in roughly 65 basis points of European Central Bank tightening this year.reuters

India's Bond Market Feels the Pressure

India's 10-year government bond yield rose to 6.74% on Monday, up 0.03 percentage points from the previous session, according to Trading Economics. The yield had touched a weekly high of 6.7734% before easing to 6.7139% by Friday's close, Reuters Thomson Reuters Corporation ↗ 8.70% reported, as traders weighed the inflationary impact of higher crude prices against hopes for diplomatic resolution. Indian bonds and the rupee were expected to track Middle East developments closely this week.tradingeconomics+1

Sukuk Market Recovery Depends on Ceasefire

The ripple effects extended beyond conventional bond markets. Global sukuk issuance fell 36% to $125 billion in the first half of 2026, and Fitch Ratings said the recovery trajectory "will depend on whether the US–Iran ceasefire holds and evolves into regional stability". The ratings agency published its Global Sukuk Monitor on July 8, warning that full-year issuance is expected to remain below 2025 levels.finimize+2

U.S. Treasury yields also remained elevated on Friday, with the 10-year note yielding 4.561% and the 30-year at 5.062%, according to CNBC, even as a U.S. official said Washington remains committed to finding a diplomatic solution.cnbc