Morning Bid: Yields give way

Morning Bid: Yields give way By Mike Dolan Tue, August 18, 2026 at 12:37 PM GMT+2 3 min read By Mike Dolan Aug 18 (Reuters) - What matters in U. S. and global markets today By Mike Dolan, Editor-at-Large, Finance and Markets Just when markets thought the Iran conflict was stuck at an impasse, the bellicose rhetoric went up several notches on Monday – and so did energy prices.

Brent ‌crude hit $91 per barrel overnight as Iranian officials talked of shifting to a "fully offensive" mode and retaining a tight grip on the Strait ‌of Hormuz. I'll get into that and more below. But first, check out my latest column on why financial officials are still fretting about the sustainability of the AI trade, even as Wall ​Street powers higher.

And listen to the latest episode of the Morning Bid daily podcast, where we dig into rising long-dated government bond yields. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week. YIELDS GIVE WAY U.

S. President Donald Trump took an uncompromising tone with Tehran on Monday, ruling out an extension of the 60-day memorandum of understanding agreed to in June and even threatening to bomb ally Oman if its talks with Iran interfere with U. S.

‌war aims. For markets, this suggests the energy blockage in ⁠the Gulf could last for many more weeks or even months. This already uncomfortable situation for oil markets – and inflation-pressured government bonds – will get even more tense as winter looms and populations feel a tighter energy squeeze.

The prospect of aggravated ⁠inflation through the winter and the potential need for fiscal offsets that raise sovereign borrowing even more has hammered long-dated government bonds around the world yet again. The 30-year U. S.

yield hit its highest in 19 years on Tuesday, as German, French and Japanese long-dated yields also hit multi-year highs. These moves were somewhat surprising given the reduction ​in ​Fed rate hike bets after a series of soft economic and inflation readings over the ​past week. But long-dated yields – which are likely being pressured, in ‌part, by competition from waves of AI-related corporate borrowing – may simply be reacting to fears the Fed could be unwilling or unable to get inflation sustainably back to target.

All this has doused equity markets early today, with Asian shares closing lower on Tuesday and Wall Street futures in the red before the bell. Elsewhere, markets will get another read on U. S.

consumer resilience on Tuesday with Home Depot's second-quarter earnings, the first in a string of updates from U. S. retail giants that will include Target and Walmart later this week.

Story Continues Chart of the day President Donald Trump's approval rating fell to the lowest level of his current ‌presidency, with an overwhelming majority of Americans concerned that the U. S. war with Iran ​will last a long time, according to a Reuters/Ipsos poll that concluded on Monday.

Just 33% of ​respondents in the four-day survey said they approved of Trump's performance ​in the White House, while 64% disapproved. Some 80% of Americans – including 87% of Democrats and 71% of Republicans – think ‌U. S.

involvement in Iran "will go on for an extended period of ​time". And with mid-term congressional elections due in ​November, the latest poll showed 38% of voters think Democrats would handle the economy better, compared to 35% who prefer the Republican approach. Today's events to watch • U.

S. July import and export prices (8:30 a. m.

EDT), housing starts (8:30 a. m. EDT), industrial production (9:15 a.

m. EDT) • U. S.

corporate earnings: Home Depot Want ​to receive the Morning Bid in your inbox every ‌weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us ​on LinkedIn and X.

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