Global Markets Shake as Iran Crisis Sparks Inflation Fears

By- Shahzad Ahmad 
May 18, 2026 at 11 AM (GST)

Main Highlights:

• Global bond markets witnessed a sharp selloff as rising oil prices fueled fears of higher inflation worldwide.
• US Treasury yields surged, with the 30-year yield hitting its highest level in nearly three years.
• Japan’s bond yields jumped to multi-decade highs, while emerging markets like India and Indonesia also faced heavy pressure.
• Brent crude climbed above $111 per barrel amid continued tensions around the Strait of Hormuz and stalled US-Iran negotiations.
• Investors are now betting major central banks, including the Federal Reserve, may keep interest rates higher for longer or even tighten policy further.
• Global stock markets extended losses, though technology shares showed resilience ahead of Nvidia Corporation earnings this week.
• The US dollar strengthened for a sixth straight session as investors rushed toward safe-haven assets during the Middle East conflict.
• Analysts warn that prolonged geopolitical tensions and elevated energy prices could intensify inflation and increase pressure on global economies.
   

  Global financial markets remained under pressure as rising tensions linked to the Iran conflict triggered another wave of selling in bond markets and intensified fears of persistent inflation. Investors rushed out of government bonds after Brent crude climbed to nearly $111 per barrel amid ongoing disruptions around the Strait of Hormuz and stalled diplomatic efforts between the US and Iran. The surge in oil prices increased expectations that major central banks may be forced to keep interest rates higher for longer to combat inflationary pressures.

  US Treasury yields climbed sharply, with the 30-year yield reaching its highest level in almost three years, while Japan’s 10-year bond yields jumped to levels last seen in 1996. Long-term Japanese yields also surged to record highs since their launch, reflecting growing concerns over global inflation and tighter monetary policy. Emerging markets including India and Indonesia also witnessed declines in bond prices.
  
  

  Global equities extended losses as higher yields weighed on investor sentiment, with Asian markets slipping from recent record highs. However, technology stocks showed resilience, helping South Korean shares recover into positive territory. Meanwhile, the US dollar strengthened for a sixth consecutive session as investors sought safe-haven assets during the escalating Middle East uncertainty. President Donald Trump further heightened market caution by warning that the “clock is ticking” for Iran to reach a deal.
   

  Some of the main moves in markets:

  Stocks

• S&P 500 futures fell 0.6% as of 6:51 a.m. London time
• Nasdaq 100 futures fell 0.6%
• The MSCI Asia Pacific Index fell 0.8%
• The MSCI Emerging Markets Index fell 0.5%
• Japan’s Topix fell 0.8%
• Australia’s S&P/ASX 200 fell 1.4%
• Hong Kong’s Hang Seng fell 1.2%
• The Shanghai Composite was little changed

• Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1621
• The Japanese yen fell 0.1% to 158.95 per dollar
• The offshore yuan was little changed at 6.8144 per dollar
• The British pound was little changed at $1.3324

• Cryptocurrencies

• Bitcoin fell 1.7% to $76,901.96
• Ether fell 3.2% to $2,119.08

• Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.62%
• Japan’s 10-year yield advanced five basis points to 2.750%
• Australia’s 10-year yield advanced five basis points to 5.12%

• Commodities

• Spot gold was little changed
• West Texas Intermediate crude rose 1.8% to $107.29 a barrel
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• Euro Stoxx 50 futures fell 0.9%