The Iran conflict has wiped $2.5 trillion from global bond markets

Bonds Suffer $2.5 Trillion March Rout—Worst Month Since 2022 as Iran War Sparks Stagflation Fears

Bonds are getting crushed. The Iran war has wiped $2.5 trillion from global bond values in March, putting the market on track for its worst month in over three years. Surging oil prices are stoking inflation expectations, sending bond prices into a tailspin. While stocks have lost even more—around $11.5 trillion—the bond rout is still striking because bonds usually rally during geopolitical turmoil. Not this time.

Total value of government, corporate, and securitized bonds has fallen from nearly $77 trillion in February to $74.4 trillion—on pace for the biggest monthly drop since September 2022, back when the Fed was aggressively hiking rates. Government bonds led the slide: the Bloomberg Sovereign Bond Index is down 3.3% in March, with corporate bonds off 3.1%.

U.S. Treasury yields have climbed to multi-month highs after three weeks of losses, as markets bet the Fed may have to hike to tame inflation. In Asia, yields are rising in India, Japan, and South Korea. Australia's 10-year yield hit its highest since 2011 on Monday, while New Zealand's touched levels not seen since May 2024. The old playbook—bonds as safe havens—has been flipped.