Governments’ borrowing costs hit further multi-decade highs as US-Iran peace hopes fade

Bond yields in US, UK, Germany France and Japan rise after ceasefire ends and Trump threatens to bomb Oman Government borrowing costs continued to rise to levels not seen in decades on Tuesday, as hopes of an end to the US-Iran war faded. Concerns about the inflation outlook worsened after the ceasefire between Washington DC and Tehran ended on Monday night without an agreement , with no progress on the reopening of the strait of Hormuz. Donald Trump’s threat to bomb Oman if they “get in the way” of negotiations helped to push oil higher on Tuesday, to above $91 a barrel , and investors fear higher energy prices will push inflation up, leading to higher interest rates. Fiscal pressures are also rising as governments ramp up defence spending, which is expected to drive borrowing higher in leading European countries such as Germany and the UK. The yield, or interest rate, on the 30-year US Treasury bond rose to 5.324% on Tuesday, the highest since June 2007, adding to gains on Monday .

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