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Many factors are sending yields higher, but rising energy costs are the inflationary trigger

The bond selloff comes as investors were already reassessing inflation risks and government borrowing as renewed military escalations between the U.S. and Iran sparked a new surge in oil prices, with crude rising to $92 a barrel on Tuesday after two Saudi oil tanks were struck in the Strait of Hormuz. The strait handled around 20 million barrels of crude oil per day before the war, and while the U.S. says between 8…

Global bond yields surged Tuesday as renewed tension between the U.S. and Iran reinforced inflation expectations, which increased the prospect of interest-rate hikes in the coming months.

In theory, the last several years should've been an ideal time to own Treasury Inflation Protection Securities (TIPS) and the related ETFs. However, the largest ETF in the category has gained just 4% since June 2025.

Yields on high-quality income assets like SCHD and EPD have declined sharply as investor demand drives up prices, compressing risk premiums. Current market conditions offer little compensation for taking additional credit risk, with high-yield spreads near multi-year lows despite pockets of economic stress. Inflation risks and elevated government interest expenses make slow-growing, high-yield stocks and fixed…