Yields surged across Asia-Pacific sovereign debt markets as bond prices retreated. The 10-year Australian benchmark rose 7 basis points to 5.0600%, while New Zealand’s equivalent gained 5 basis points to 4.7720%. In Japan, the 10-year bond yield climbed 1 basis point to 2.780%. Taylor Nugent, a senior economist at National Australia Bank, noted that the shifting balance of inflation risks is pushing global yields higher.

Market anxiety is tied to the escalating conflict in the Red Sea and potential supply disruptions in the Persian Gulf. President Trump warned of "major military punishment" for Iran following attacks on Saudi oil tankers, framing Houthi militants as proxies for the Islamic Revolutionary Guard Corps. Analysts at ANZ Research highlighted that the Red Sea has become a critical, yet increasingly vulnerable, alternative route for Saudi exports. This geopolitical instability compounded a broader risk-off sentiment in equity markets, where Japan's Nikkei 2.6% drop and South Korea's Kospi 2.8% decline mirrored a wider retreat from technology stocks following disappointing earnings reports.