US Bonds Poised to Erase Year’s Gains as Oil Surge Deepens Slump

Treasuries slumped, sending short-term yields to their highest levels since August, as the prospect of a prolonged and costly Iran war drove a surge in oil prices and revived fears of an inflation shock.

The selloff, sparked by a late-day jump in crude, ripped through the $31 trillion US bond market, leaving it on the verge of erasing this year’s gains. Traders — already wary of resurgent inflation, a slowing economy and the cost of the war adding to budget deficits — pushed back their expectations for the next Federal Reserve interest-rate cut to mid-2027.