A global sovereign bond selloff extended into its sixth consecutive session on Wednesday, pushing borrowing costs across Europe, Asia and North America to multi-year and multi-decade highs. The retreat from fixed-income assets has been driven by Middle East military escalation, heavy corporate borrowing to finance artificial-intelligence infrastructure and continued hawkishness from central banks. Germany’s two-year Schatz yield reached 2.983%, its highest level since 2024, while the 10-year Bund yield rose to 3.370% and the 30-year yield to 3.845%, both their highest levels since 2011. France’s 10-year OAT yield climbed to 4.244%, a level last seen during the 2008 global financial crisis, as fiscal deficits added to pressure on borrowing costs. Australia’s 10-year government bond yield reached 5.205%, its highest since 2011, after strong gross domestic product data and unexpectedly high July inflation strengthened expectations of a fourth Reserve Bank of Australia rate increase before year-end. Japan’s 10-year government bond yield remained above 3.000%, its highest since 1996, marking a major shift for a market long associated with exceptionally low sovereign yields under the Bank of Japan’s ultra-loose policy. The selloff has intensified as direct U.S.-Iranian military exchanges raise the risk of an energy-led inflation shock. Washington carried out another airstrike against Iran’s Islamic Revolutionary Guard Corps, its second direct attack on Iranian targets this week, after Iranian missile strikes on U.S. air bases in Jordan. Tensions around the Strait of Hormuz have also persisted; although the United States says the waterway remains open to commercial shipping, maritime tracking data shows vessel traffic at only a fraction of pre-war levels. U.S. President Donald Trump has warned of harder strikes if Tehran retaliates and threatened targeted action against Kharg Island, Iran’s main crude export hub. Energy benchmarks have consequently risen above $90 a barrel, raising the risk that transport and fuel costs will revive cost-push inflation and limit central banks’ ability to keep rates unchanged or cut them. At the same time, technology companies and multinational corporations are issuing corporate bonds at a record pace to fund artificial-intelligence infrastructure, data centers and advanced semiconductors. This supply is competing with government debt for institutional capital while major central banks reduce their balance sheets through quantitative tightening (central-bank asset reduction). The simultaneous flood of sovereign and corporate issuance is prompting global capital desks to demand higher term premia (extra yield for holding longer-term bonds), keeping government borrowing costs at levels not seen in decades.