Global Bond Yields Swing Wildly in May as Iran War, Peace Talks Jolt Markets

Global bond yields surged to multi-decade highs in mid-May before plunging sharply as escalating Iran war tensions, hot inflation data, and shaky peace efforts whipsawed investors. The 30-year U.S. Treasury yield spiked to 5.2% on May 20, its highest since 2007, while Germany’s 10-year yield hit its highest since 2011 and British gilts touched levels not seen since 1998. Oil prices above $110 a barrel and stalled peace talks fueled fears of further central bank rate hikes. Yields then reversed course as progress in U.S.-Iran negotiations and shrinking euro zone economic activity cooled rate-hike expectations. The U.S. 10-year yield edged up 6 basis points for the month, outperforming on strong growth, while UK 10-year yields fell 21 bps after a leadership contender pledged fiscal discipline. Longer-dated debt led the sell-off amid mounting fiscal jitters and doubts over the new Fed chair’s independence.