Government bond yields rose across major markets as escalating conflict in the Middle East threatened energy supplies and increased inflation risks, while investors also absorbed a surge in artificial-intelligence infrastructure borrowing. Economist Paul Krugman said synchronized increases in long-term yields reflected corporate demand for capital to finance AI rather than policies of the Donald Trump administration, although Goldman Sachs also cited widening fiscal deficits and resilient economic data. Brent crude traded above $100 a barrel and was just below $106 on Friday morning as the Strait of Hormuz remained effectively closed amid fighting between US forces and Iran, while Yemen's Iran-backed Houthi rebels attacked Saudi energy targets and advanced toward the Bab el-Mandeb Strait. The European Central Bank, the eurozone's central bank, raised its deposit rate from 2.25% to 2.5% and warned inflation could remain "well above target for an extended period." Germany's 10-year yield reached around 3.5%, while French, Italian and Spanish equivalents were about 4.44%, 4.37% and 3.96%. The UK's 10-year gilt yield reached 5.378%, its highest level since 2007, while 20- and 30-year gilt yields reached 5.895% and 5.948%, their highest levels since 1998. The US 30-year Treasury yield rose above 5.38%, its highest level since 2007, and the 10-year yield approached 5%, compared with earlier checks near 4.91%. A Treasury buyback was completed at $5.2 billion against a $6 billion cap, after an earlier operation had been described as tripling to $6 billion. Major hyperscalers, including Alphabet and Amazon, issued more than $200 billion of debt in 2026, while a broader Goldman Sachs estimate put AI-related issuance at nearly $500 billion by early August.