Government bond yields across major economies are rising together to levels unseen in years or decades as Middle East conflict drives energy prices higher and investors grow more concerned about public debt. On September 2, Germany’s 10-year yield rose 4 basis points to 3.378%, its highest since 2011. Japan’s equivalent yield stayed above 3% after crossing that level for the first time in three decades, while the U.S. 10-year Treasury yield reached 4.81%, its highest since November 2023. UK 10-year gilts climbed to 5.25%, an 18-year high, and Australia’s comparable yield reached 5.198%, its highest in more than 15 years. Brent crude rose 1% to $95.61 a barrel after gaining nearly 6% in the previous session as the United States and Iran continued exchanging attacks. European natural gas prices also reached their highest levels since early 2023, raising concerns that persistent inflation could prompt tighter monetary policy. Hawkish remarks by Fed Chair Kevin Warsh helped lift expectations for a 25-basis-point U.S. rate increase at the September 15–16 meeting; CME FedWatch put the probability at 64.2%, reversing the market’s hold expectation from a week earlier. The European Central Bank is also expected to raise rates on September 10. Rising government yields are being reinforced by heavy corporate borrowing to fund artificial intelligence investments, with Alphabet, Amazon, Meta, Microsoft and Oracle issuing $220 billion of bonds this year, twice last year’s total, according to LSEG data. Investors are also reviving concerns about fiscal discipline and the role of bond vigilantes (investors demanding higher yields to pressure governments). Ed Yardeni said a 5% 10-year U.S. Treasury yield could prompt Treasury Secretary Scott Bessent to issue more short-term debt and repurchase longer-dated bonds. The U.S. Treasury intervened last month to cool long-term yields, but the effect was temporary, with the 30-year yield returning near its 19-year peak. Higher benchmark yields have pushed U.S. 30-year mortgage rates to 6.7% and the 2-year Treasury yield to 4.41%, its highest since January 2025. IMF Managing Director Kristalina Georgieva warned that rising borrowing costs in developed economies could erase debt-control gains and widen financing pressures for emerging and low-income countries. Central banks are monitoring the market, with potential bond purchases in a severe selloff, while officials in Japan reiterated their commitment to appropriate debt and budget management. Investors have so far not sharply punished U.S. stocks because of strong corporate earnings, but rising government yields remain a key threat to equity valuations.