An intensifying bond rout is taking place across the globe, and while some of the selling has been for local reasons, like the political turmoil in the U.K., the vast majority have been in response to macroeconomic concerns. The energy shock from the Iran war doesn't appear to be letting up any time soon, with President Trump continuing to reiterate that he is "under no pressure whatsoever" to reach an end to the conflict. That could mean a return to inflationary pressures and the possibility of a Federal Reserve that is forced to hike interest rates. In fact, the CME's FedWatch Tool is now forecasting a more than 50% chance the central bank will need to raise rates by December.

Higher for longer? Those three words were the fear of markets in recent years, and current realities could bite harder this time around. Deficit concerns are more pronounced amid major national debt, especially with governments introducing emergency measures to protect their economies from the surge in energy prices. The fiscal backdrop is making investors nervous, putting a damper on the AI momentum that has underpinned sentiment in recent weeks and buoyed equities through earnings season.

As bond markets fall under pressure, yields—which move inversely to prices—are surging globally. The benchmark 10-year U.S. Treasury yield hit its highest level in around a year on Friday at 4.63%, soaring more than 20 basis points over the course of a week. It also came just days after a 30-year U.S. auction offered the highest yield since 2007. Over in Japan, the 30-year JGB advanced more than 10 bps to their highest on record at 4.2%, while European government bond yields are climbing across France, Italy, Spain, and Germany.

Outlook: G7 finance ministers and central bankers are meeting in Paris today and tomorrow as borrowing costs continue to surge. Ahead of the gathering, ECB President Christine Lagarde was peppered with questions about the global bond market selloff and responded by saying, "I always worry; that's my job!" French Finance Minister Roland Lescure also noted that bond markets are "undergoing a correction [though] I wouldn't say they're collapsing" and "we are no longer in a period where public debt is not a subject." Take the WSB survey.