Brent Crude rises after Trump says he wants to ‘take the oil’ in Iran; Starmer to gather business leaders to discuss emergency measures – business live | Business

Government bonds around the world are set for the biggest monthly losses in more than a year, as investors worry about the impact of a prolonged war in the Middle East on inflation and economic growth.

Declines in bond prices have pushed their yields (or interest rates) higher, although they eased on Monday.

The two-year US Treasury yield is set for a monthly rise of around 50 basis points, the biggest increase since October 2024. Australia’s three-year yield is also 50bps ahead in March, the most in 17 months. Japan’s two-year government bond yield has risen 12.5bps this month.

Moh Siong Sim, a strategist at the Singapore bank OCBC, told Reuters:

Now that the reality is sort of sinking in that perhaps the oil price might stay high for a bit longer, given that it’s hard to see an end to the war anytime soon, the growth impact is starting to become more of a focus.

The buzzword here is stagflation. Initial focus was on inflation. Now the ‘stag’ bit is moving into the picture, and that’s perhaps explained why short-ended bond yields have come off.

Oil prices have surged above $100 a barrel since the US and Israel began attacking Iran on 28 February. This has raised fears of higher inflation, and led to a dramatic shift in interest rate expectations. The Bank of England is now expected to raise interest rates, rather than cutting them, at least twice this year, as is the European Central Bank.

The US Federal Reserve, which has been under pressure from Donald Trump to cut rates, is forecast to leave them on hold.