Iran war raises price of money

Yellow lights are flashing in the most important market on the planet: The US bond market. The turmoil is being driven by a confluence of separate but related forces. The US war with Iran is heating up again, driving up US defense spending and the cost of oil, gasoline, diesel and jet fuel. That energy spike is reinforcing inflation worries in a bond market already nervous about America’s $40 trillion mountain of debt. The yield on the benchmark 10-year Treasury, which is a measure of how much the US government pays to borrow more money, climbed on Wednesday to the highest level in nearly three years. The bond market stress will make it more expensive for consumers to get a mortgage, for businesses to borrow and for Washington to pay the bills. The risk is that this situation morphs into a doom loop, where the more the war intensifies, the more it will spook the bond market and slow the economy and stocks. “It feels like there is no end to the inflation problem, the war or the deficit in the near term,” said Hardika Singh, economic strategist at Fundstrat, an investment research firm. That energy spike is reinforcing inflation worries in a bond market already nervous about America’s $40 trillion mountain of debt. The yield on the benchmark 10-year Treasury, which is a measure of how much the US government pays to borrow more money, climbed on Wednesday to the highest level in nearly three years.