LME Nickel Stocks up 312 MT to 268,848 MT

• Markets: Stocks slipped yesterday after the combination of the deepening bond crisis and renewed hostilities in Iran (more on both shortly) gave investors the spooks. Elsewhere, Dell fell ahead of its Q2 earnings report, briefly blunting its bonkers momentum before moving up again in after-hours trading.

Government debt was on sale in several countries yesterday, with bond prices hitting longtime lows for the same reasons that had traders dumping US Treasury bonds in recent weeks.

Investors around the world are demanding higher premiums for holding longer-term government bonds amid fears of unsustainable debt levels and persistent inflation that could prompt central banks to hike interest rates. The inflation concern deepened after the US and Iran began exchanging fire again over the weekend following a month-long pause, pushing oil prices up by almost 6% this week.

Global sale

Bloomberg calculates that the G7 developed economies saw their average government bond yields—which move in the opposite direction to bond prices—rise to the highest level since 2000:

• The yield on the 30-year UK government bond hit its highest point since 1998 yesterday.
• Japanese 10-year government bond yield broke 3% yesterday for the first time since 1996 amid reports that the government is due to expand its budget, while lowering taxes. Treasury Secretary Scott Bessent suggested he thinks the country’s central bank will raise interest rates to support the yen.
• France’s 10-year bond yield rose to near 2008 highs last week due in part to concerns about unsustainable levels of government borrowing.

Stateside…Treasury bond yields rose slightly. Last month, they hit the highest level since 2007, declining briefly after Bessent announced the expansion of a government bond buyback program, before rising again. Meanwhile, the trading odds that the Federal Reserve will raise interest rates at its next meeting nearly doubled to almost 70% since last week.

Why it matters: Aside from raising borrowing costs for governments, growing yields herald higher borrowing costs for consumers and businesses.

Meanwhile…G20 finance ministers are meeting in Asheville, NC this week, and how the Treasury intends to deal with the bond market is likely on the agenda.—SK

🌍 US launches new series of airstrikes on Iran. The US military struck Iran near the Strait of Hormuz yesterday, which it said was in response to recent attacks by Iran on commercial ships in the waterway. In a social media post, President Trump said that if Iran retaliates, “they will be hit again at a much harder and higher level.” Iran said it would respond with “crushing and devastating blows.” The renewed hostilities come after weeks of relative calm in the region, as the US pivoted to hitting Iran with economic sanctions instead of missiles. But the tit-for-tat strikes now threaten to increase tensions further, six months after the war began. More than 50,000 US troops are currently stationed in the Middle East, the largest buildup in decades.

🎥 Trump endorses bipartisan Hollywood tax incentive plan. One thing that apparently can bring Republicans and Democrats together is a love of the movies. President Trump threw his support behind a federal tax incentive for US film and TV production, which California lawmakers have long suggested to prevent industry jobs from leaving for other countries. Sen. Adam Schiff, a Democrat, said he was in “strong agreement” with Trump on the issue. Per Variety, around 73,000 US film jobs—two-thirds of which were in Los Angeles—have been lost since 2022 as aggressive tax incentives and lower labor costs increasingly lure productions overseas.

🇨🇦 Carney asks US to “stop doing memes” amid trade war. Canadian Prime Minister Mark Carney told reporters yesterday that he is open to resuming the stalled trade talksbetween the US and Canada, but only “when the Americans stop doing memes, stop throwing shade, stop trying to be tough and start being serious.” The PM’s comments were in response to a question about Trump administration officials making fun of Canada’s military, CNBC reported. “It’s beneath their office,” Carney added. Negotiations are at a standstill after the US slapped Canada with 50% tariffs on $20 billion worth of goods last month and Canada responded with retaliatory tariffs three days later.—AE

🚗 DOT shut down nearly 300 driving schools over failed English proficiency tests. Transportation Secretary Sean Duffy announced an emergency shutdown of close to 300 driving schools that issued commercial driver’s licenses to more than 5,000 individuals who failed English proficiency tests.

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Answer to today's trivia question:  Unlike other currencies, dollar bills are not made of paper or plastic. U.S. dollar bills are made from a special fabric blend composed of 75% cotton and 25% linen. This mix makes the bills extremely durable and resistant, and they can be folded about 4000 times before tearing.