The US-Iran conflict pushes up US Treasury yields, potentially increasing fiscal interest expenses by 3.8 billion

According to the Financial Times, the US-Iran conflict has driven up oil prices and inflation expectations, with the US 10-year Treasury yield rising to 4.58%, higher than the Congressional Budget Office's forecast of 4.13%. The 30-year US Treasury yield has reached its highest level since 2007. If current yields remain until the end of this fiscal year, US fiscal interest expenses will increase by about $800 million; if they persist until the 2027 fiscal year, additional interest costs will exceed $3 billion. The market is concerned that rising oil prices and an expanding deficit are fueling inflation and further exacerbating US Treasury sell-offs. Some Wall Street investors believe the Federal Reserve is not responding adequately to inflation risks, and there is market discussion about the possibility of the Treasury issuing more ultra-short-term bonds or the Federal Reserve restarting Operation Twist.