The US Iran conflict has pushed up US bond yields and may increase fiscal interest expenses by 38 billion yuan

According to the Financial Times, the conflict between the United States and Iraq has pushed up oil prices and inflation expectations. The yield of the 10-year treasury bond bond of the United States rose to 4.58%, higher than the 4.13% predicted by the Congressional Budget Office. The yield on 30-year US Treasury bonds has reached a new high since 2007. If the current yield is maintained until the end of this fiscal year, the US government's interest expenses will increase by approximately $8 billion; If maintained until the fiscal year 2027, the additional interest cost will exceed $30 billion. The market is concerned that rising oil prices and expanding deficits will push up inflation and intensify the sell-off of US Treasury bonds. Some investors on Wall Street believe that the Federal Reserve's response to inflation risks is insufficient, and the market is discussing the possibility of the Treasury issuing ultra short bonds or the Fed restarting its "turnaround operation".