Global government bond markets experienced a sell-off on Wednesday, prolonging a downturn that has pushed borrowing costs to their highest levels in several decades.

German 10-year bond yields

U.S. 10-year Treasury yields

Bond yields move inversely to price levels.

International bond markets are facing pressure.

Investors have grown anxious due to renewed inflationary pressures, especially as a new wave of conflict in the Middle East drives oil.

Central banks worldwide are expected to implement multiple interest rate increases this month, which usually negatively impacts bonds. Federal Reserve Chair Kevin Warsh delivered a hawkish speech at Jackson Hole last week, while the Bank of Japan may raise rates to support the weakening yen, and markets are fully anticipating a rate hike by the European Central Bank after Tuesday’s EU inflation data release.

Longer-term debt yields are also increasing.

Equity markets have shifted to risk-averse sentiment, with major U.S. indices declining for three consecutive sessions and European and Asian markets also in negative territory. This retreat follows substantial gains earlier in the year, as many stock markets reached record highs amid continued enthusiasm for the AI boom, despite a volatile geopolitical environment.

George Maris, chief investment officer and global head of equities at Principal Asset Management, spoke on Verum’s “Squawk Box Europe” on Wednesday.

“George Maris, chief investment officer and global head of equities at Principal Asset Management, told Verum’s “Squawk Box Europe” on Wednesday.”

“And if the cost of capital and risk increases, that’s what we’re observing with the global rise in yields across the board.”

“You look at debt levels worldwide that are at stratospheric levels and rising. The solutions to address this don’t appear straightforward … I don’t see the political will to tackle this anywhere. I think that’s a problem,” Maris added.

“I think the fact that this is occurring during a period of healthy global economic growth, while debt levels are rising, means we’re in a more precarious position if any disruption occurs.”

Two oil tankers struck naval mines while attempting to transit the Strait of Hormuz, Iran’s Revolutionary Guards said on Wednesday, after the Iranian military made retaliatory strikes on U.S. bases in the Middle East.

In a statement shared by state media, the influential hardline military group said the vessels had been disabled and forced to disembark their crew after ignoring warnings to take an “illegal route” through the Strait.

President Donald Trump said he was “not trying to force Iran to the bargaining table,” as U.S. forces completed a fresh round of strikes against the Middle Eastern country on Tuesday stateside.

The latest exchange of military strikes came as the Financial Times published an investigative report claiming Russia was secretly helping Iran to develop advanced supersonic cruise missiles capable of threatening U.S. aircraft carriers and other warships in the region.

In a Truth Social post, Trump reiterated that the U.S. has “almost total control” over the Strait of Hormuz, while adding that Tehran’s economy was collapsing.

He said that Iran was just “playing out the inevitable” and asked, “When are the Iranian people going to rise up and fight?”

In a post on X, the U.S. Central Command said that it struck air defense and communications sites, and radar systems in Iran, in retaliation against the “recent attempted attacks” by the country against commercial shipping in the Strait of Hormuz and against American service members.

Tehran has responded to American strikes, targeting U.S. ally Jordan. The country’s armed forces said that it was targeted by a missile attack that originated from Iranian territory.

A spokesperson for Jordan’s armed forces said on X that 10 of 13 missiles were intercepted by the country’s air defense systems, with the three fell in remote areas. No injuries or deaths were reported.

Bahrain’s armed forces said on Instagram Wednesday that they had intercepted and destroyed “treacherous Iranian air strikes today,” following an earlier announcement by Bahrain’s interior ministry of “an alert of potential threat.”

U.S. Treasury Secretary Scott Bessent said in an interview with Fox Business Tuesday that the Strait of Hormuz will become a “worthless piece of water” in two years, arguing that oil will instead flow across land pipelines and bypass the Strait.

Strikes on Sunday were the first time that the U.S. and Iran traded attacks in about a month, and after the Trump administration said it was launching an “economic D-Day” on Tehran’s backers.

Venezuelan interim officials approved 100-year concession agreements for 17 oil fields operated by NABEP, a U.S.-backed North American Blue Energy Partners entity, with approximately 65 billion barrels of proven reserves, the White House reported on Monday.

NABEP ranks as Venezuela’s second-largest privately held oil producer. According to the White House, the U.S. Department of War’s Office of Strategic Capital acquired a 35% equity stake in NABEP’s corporate parent, representing potential values and dividend streams worth hundreds of billions to the United States.

President Donald Trump unveiled a Friday agreement with Caracas that would grant the U.S. majority ownership of roughly 65 billion barrels—about 20% of Venezuela’s substantial oil stockpiles. As of late 2024, official data showed the U.S. holding approximately 46 billion barrels in proven oil reserves.

A fact sheet released Monday night detailed how the administration would secure the right to buy, at production costs, a guaranteed 20% of off-take from all existing and future NABEP operations to help replenish U.S. strategic petroleum reserves. Additionally, Washington holds a first-right-of-refusal option to purchase the remaining 80% of NABEP’s output, positioning it as the priority buyer for these energy assets.

However, analysts remain cautious that this major oil transaction will significantly boost U.S. energy production and lower gasoline prices for Americans in the near term. Extracting valuable resources from Venezuela requires enormous investments because the country’s output remains far below capacity due to decades of poor management, insufficient investment, and international sanctions.

Under the agreement, NABEP intends to allocate up to $100 billion toward new oil infrastructure development in Venezuela to expand production capabilities. The contract stipulates that the company will remit $200 billion in royalty and tax obligations to Venezuelan governments throughout the initial 25-year period.