Germany’s finance minister blames Trump’s Iran war for bond yield surge

Germany’s finance minister just pointed the finger squarely at Washington. Lars Klingbeil, speaking from a press conference in Liechtenstein, said the surge in global bond yields traces back to one source: Donald Trump’s military campaign in Iran. The accusation carries weight because the numbers back it up. Germany’s 30-year government bond yield has climbed to 3.79%, its highest level since 2011. Across the Atlantic, the US 30-year Treasury yield blew past 5.33% in mid-August. When both the world’s safe-haven bond markets are selling off simultaneously, something systemic is going on. The oil-inflation-bonds chain reaction The US-Iran conflict has pushed oil prices above $91 per barrel. Expensive oil feeds directly into inflation expectations, because energy costs ripple through every layer of an economy, from manufacturing to transportation to grocery store shelves. When investors expect higher inflation, they demand higher yields to hold government bonds. Nobody wants to lock in a fixed return for 30 years if they think inflation will eat it alive. So they sell bonds, which pushes yields up, which makes it more expensive for governments to borrow. Klingbeil’s framing was delibe...