Good morning. Here’s what happened overnight and what you need to know today.

1.

New strikes: US forces began a fresh wave of strikes against Islamic Revolutionary Guard Corps targets in Iran overnight, US Central Command said, the second round of US strikes in three days and enough to send oil prices about 5% higher. The strikes followed attempted IRGC attacks on commercial shipping in the Strait of Hormuz and on American service members in the region, Central Command said. President Donald Trump said on Truth Social they were “large and powerful, and in retaliation for the Iranians’ failed attempt at adding sea mines to the Strait”, warning that if Tehran retaliates “they will be hit again at a much harder and higher level”. The IRGC said in a statement after the strikes began that it would retaliate with “crushing” force and impose heavy costs on the United States. Brent crude pushed above USD94 a barrel and the US 10-year Treasury yield rose to 4.79%, its highest since early 2025, as investors fretted that higher oil prices will worsen inflation. Reuters reported Iran has now gone about seven weeks without meaningful crude exports through Hormuz, a blockade succeeding where years of sanctions failed. (US CENTCOM)(NYT)(FT)(Reuters)

2.

Bond fire: A deepening global bond selloff pushed the Australian government’s 10-year yield to a 15-year high yesterday, with the rate settling at 5.16%, its highest since April 2011. Japanese 10-year yields hit 3%, their highest since 1996, after US Treasury Secretary Scott Bessent hinted at possible BOJ rate hikes. UK 30-year borrowing costs reached their highest since 1998 and the US 10-year yield edged towards 4.8%, as investors bet central banks will step up the pace of rate rises. The jump in oil prices was the latest catalyst, with Brent crude climbing after the US and Iran resumed direct attacks. Governments still have heavy borrowing to do, where five AI hyperscalers have issued USD220 billion of debt this year alone, more than double last year’s total, according to LSEG data. It comes as traders price an almost 70% chance the Fed hikes this month, up from just under 40% a week ago, with the ECB, Bank of Japan and RBA also expected to move. Corporate credit has stayed calm through the rout, with US high-grade spreads still within a few basis points of their lowest in a quarter-century, according to Bloomberg. Though the publication’s analysis found about USD1 trillion of company bonds are trading unusually wide of their credit rating. (ABC)(Reuters)(Bloomberg)(WSJ) (Capital Brief)