Bond yields surge and stocks tumble as inflation fears grow

Bond yields surged and stock markets opened lower amid growing concerns that the Fed will raise interest rates this month to combat persistent inflation.

U.S. government borrowing costs surged Tuesday and stock markets opened sharply lower amid growing concerns that the Federal Reserve will raise interest rates at its next policy meeting to combat persistent inflation.

The yield on the 10-year Treasury note, which represents the return investors demand for lending money to the U.S. government for a decade, hit its highest level since January 2025, rising to about 4.79%.

On Wall Street, the benchmark S&P 500 opened 0.7% lower, nearing its one-month low, while the tech-heavy Nasdaq was down 1.3%.

The immediate cause for the move higher in the 10-year yield was renewed tensions with Iran and in the Strait of Hormuz, which sent the price of Brent crude up 2% Tuesday to more than $92, its highest level in about a week.

A British government agency said a tanker had been struck late Monday off the coast of Oman, while the U.S. and Iran traded tit-for-tat strikes on military installations in the Middle East.