Bond investors in revolt as Iran threatens to go 'fully offensive'

A look at the day ahead in European and global markets

Morning Bid Europe Morning Bid Europe A look at the day ahead in European and global markets By Gregor Stuart Hunter, Asia Finance & Markets Breaking News Correspondent   Data refreshes every time you open this email. For more European market news, click here. Please send any feedback to morningbid@thomsonreuters.com. Government borrowing costs are rising to levels not seen in decades as the conflict in the Middle East worsens and investors fear the effect on inflation. The yield ‌on the 30-year Treasury bond hit its highest level since June 2007 on Tuesday, reaching an intraday high of 5.321%, as soft economic data prompted more traders to bet the Federal Reserve will refrain from hiking interest rates to curb inflation. Today's Market News Bond yields jump, oil extends gains as US-Iran ceasefire expires Trading Day: Bonds play the blues Sterling advances ahead of economic data that could test rally FTSE 100 falls for sixth day in a row as consumer stocks weigh Ferrari's bespoke Luce EV one-off fetches $40 million at charity auction  Yields keep climbing A Japanese yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration The prospect of higher energy prices - Brent crude is up for a third day at around $91 per barrel - alongside vague signals ⁠from the U.S. central bank over the path ahead spilled over into global fixed income on Tuesday. The yield on the benchmark 10-year Treasury bond was up 0.4 basis point at 4.7259%, while corresponding Japanese government bond yields climbed 2.5 basis points to 2.945%, a three-decade high. The rise in oil prices comes as a senior Iranian official told Reuters that Tehran would shift to a "fully offensive" military posture because efforts to negotiate a permanent end to the war with the U.S. have stalled. Washington ruled out extending a temporary ceasefire agreement that expired on Monday. Graphics are produced by Reuters US-Iran truce expires Underscoring the diplomatic strains, ‌U.S. ⁠President Donald Trump also threatened to bomb Oman if they "get in the way" of negotiations around the future of the Strait of Hormuz. The Gulf state is the latest American ally to attract his ire this week, following South Korea and Canada. The selloff in global fixed income weighed on equities in the Asian trading ⁠session, with MSCI's broadest index of Asia-Pacific shares outside Japan off 0.7%, dragged down by a 1.5% fall in South Korea's KOSPI as the Seoul market returned after a holiday.  The Nikkei 225 slumped 2.1%, while ⁠S&P 500 e-mini futures were down 0.3%. In early European trades, pan-region futures were down 0.4%, German DAX futures were 0.5% lower, and FTSE futures were flat.   Key developments that could influence markets on Tuesday: UK: Unemployment rate and average weekly earnings for June, HMRC payrolls change for July, labour productivity for Q1 Euro Zone: ZEW Survey Expectations for August Germany: ZEW Economic Sentiment for August Debt auction: UK 10-year government debt    Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.   Sponsors are not involved in the creation of newsletters or other Reuters news content. Advertise in this newsletter or on Reuters' website   Morning Bid is sent every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here. Want to stop receiving this email? Unsubscribe here. To manage which newsletters you're signed up for, click here. This email includes limited tracking for Reuters to understand whether you’ve engaged with its contents. For more information on how we process your personal information and your rights, please see our Privacy Statement. Terms & Conditions   © 2026 Thomson Reuters. All rights reserved. 3 Times Square, New York, NY 10036