{"id":757686,"date":"2026-09-02T11:36:12","date_gmt":"2026-09-02T11:36:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/757686\/"},"modified":"2026-09-02T11:36:12","modified_gmt":"2026-09-02T11:36:12","slug":"global-bond-sell-off-intensifies-as-us-iran-tensions-stoke-inflation-fears-bonds","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/757686\/","title":{"rendered":"Global bond sell-off intensifies as US-Iran tensions stoke inflation fears | Bonds"},"content":{"rendered":"

The global government bond sell-off resumed on Wednesday, driving up the UK\u2019s borrowing costs and exacerbating the challenges facing John Healey<\/a> as he prepares his first budget.<\/p>\n

The yield \u2013 effectively the interest rate \u2013 on 10-year UK government bonds, or gilts, jumped to just below 5.3% in early trading: its highest level since mid-2008.<\/p>\n

Investors across major markets have been dumping bonds in recent days amid fears about inflation and spiralling deficits.<\/p>\n

Graph of 10-year UK government bond yields from 2000 to 2026<\/a><\/p>\n

Global inflation fears have intensified since the US and Iran began exchanging fire again at the weekend, pushing up the oil price and increasing expectations that central banks will have to raise interest rates in the coming months.<\/p>\n

Higher bond yields progressively increase the cost of financing the government\u2019s debt. UK analysts have warned that higher gilt yields since the start of the Iran war have potentially wiped out almost half of Healey\u2019s headroom<\/a> against the government\u2019s fiscal rules.<\/p>\n

Graph of the price of oil since February <\/a><\/p>\n

Economists at Deutsche Bank reckon the \u00a326bn room for manoeuvre Rachel Reeves created at her spring forecast could be down to less than \u00a314bn by the time of the 28 October budget.<\/p>\n

Healey would then have to decide whether to rebuild the margin for error with tax increases or spending cuts \u2013 alongside facing pressure to fund higher defence spending.<\/p>\n

Chris Beauchamp, the chief market analyst at IG, said: \u201cGovernments around the world are feeling the pressure from bond markets, but the situation is particularly acute for the UK, where Andy Burnham\u2019s grand promises about reforming the economy are about to meet the cold reality of high debt levels and rocketing borrowing costs.\u201d<\/p>\n

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The Brent crude oil benchmark is currently hovering at about $95 a barrel amid renewed fighting in the Middle East. The US launched new airstrikes on Iranian targets overnight<\/a>, prompting counterstrikes by Tehran targeting American interests in Gulf allies.<\/p>\n

The resumption of the sell-off in UK markets came after Asian stock markets fell sharply. In Tokyo the Nikkei 225 share index slumped by 2.85%. China\u2019s CSI 300 lost 1.4%, while South Korea\u2019s Kospi dropped by 3.3%.<\/p>\n

Investors have also been rattled in recent days by the US administration\u2019s attempts to interfere in financial markets \u2013 including helping the Japanese to prop up the value of the yen and buying back more US government bonds, or treasuries, to rein in rising yields. Neither move appears to have been successful.<\/p>\n","protected":false},"excerpt":{"rendered":"The global government bond sell-off resumed on Wednesday, driving up the UK\u2019s borrowing costs and exacerbating the challenges…\n","protected":false},"author":2,"featured_media":757687,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-757686","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/757686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=757686"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/757686\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/757687"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=757686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=757686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=757686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}