Worries about runaway government spending. A new Federal Reserve chairman. The huge surge in bond issuance to fund the artificial-intelligence build-out. There are many forces pushing Treasury yields higher. But the main driver of the recent run-up: inflation.

While a confluence of factors have powered the global bond slide that carried yields to multiyear highs around the world, a look inside market shifts suggests the key factor in this country remains the sharp climb in energy prices driven by the war in Iran.

"The sharp rise in global bond yields reflects investors reassessing inflation," said Mike Goosay, chief investment officer and global head of fixed income at Principal Asset Management.

Here is a look at the key factors:

Fuel prices

Diesel prices have surged this summer since the U.S.-Iran ceasefire fizzled and Ukraine began a campaign to knock out refineries in Russia, which is a major exporter of the fuel. Rising diesel prices tend to be more inflationary than those for gasoline since it is burned by trucks, trains, construction equipment and farming implements, lifting the cost of producing and shipping all manner of goods.

U.S. national average retail prices for diesel exceeded $5.68 a gallon on Wednesday, about $2 higher than a year ago, according to Dow Jones Energy. The price is less than a penny shy of the high hit this spring after fighting began in the Persian Gulf and hindered transit through the Strait of Hormuz and within 13 cents of the record set in 2022 after Russia invaded Ukraine.

Futures trading points to higher prices at the pump down the road. Diesel futures for October delivery have risen roughly 13% over the past week.

Deficits

It isn't just inflation driving yields higher. Some investors also cited concerns over out-of-control government spending.

Gross U.S. debt surpassed $40 trillion for the first time last month, a milestone that only amplified the chorus of economists warning that America is on an unsustainable fiscal trajectory. Publicly-held U.S. debt as a share of gross domestic product is fast approaching levels not seen since World War II.

Overseas, soaring government bond yields in the U.K. have forced the government to try to cut its debts. And Japan's 10-year government bond yield just hit the highest level in about 30 years amid a debate over tax cuts that could weaken Japan's fiscal position.

Term premium

One place investors' worries about fiscal policy or the growing supply of bonds would be evident is the term premium, typically defined as the component of Treasury yields that reflects everything other than investors' expectations for short-term interest rates set by the Federal Reserve.

That has climbed recently. But the biggest change has come since the start of the Iran war, and some investors and economists note that term premiums are higher in Europe and Japan, signaling more worry about the fiscal situation overseas.

Interest-rate bets

Fed Chairman Kevin Warsh's Jackson Hole speech in late August alleviated some worries the Fed was insufficiently committed to fighting inflation, helping spark the climb in yields.

Still, Warsh has eschewed offering forward guidance like his predecessors, and the increased uncertainty is likely getting baked into longer-term borrowing costs in the U.S. and around the world, said David Kelly, chief global strategist at J.P. Morgan Asset Management.

"If you have to identify one thing that's distinctly different from a few months ago, I do think it's the behavior of the Federal Reserve since Kevin Warsh took over," Kelly said. "I think there has been a Fed risk premium, even if it's a small one, added to markets."

Meanwhile, the effects of Treasury Secretary Scott Bessent's plan to buy back more longer-term bonds have been short-lived. "If the government says it's going to raise taxes and cut spending to bring the deficit down, that's one thing," Kelly added. "Saying you found another credit card that you haven't maxed out in your stack of 20 doesn't actually inspire confidence."