The Globe and Mail reports in its Saturday edition that during the Iran war, stock markets rallied, and oil prices have remained surprisingly stable. The Globe's contributing columnist John Rapley writes that bond investors, however, have grown increasingly uneasy, leading to a significant price drop in the past two weeks. Falling prices result in higher effective returns. Now the government must offer better rates when issuing new bonds. Thus, investors are effectively forcing interest rates higher. No single event triggered the wave of selling. The debts of Western governments have risen sharply, and now look set to continue doing so. Investors, worried there's no end in sight, are thus demanding higher payments for the money they lend to governments, since they think those governments might try inflating their way out of debt. Until recently, investors had been willing to believe the pledges by governments that their borrowing increases would be only temporary. However, the Iran war may have tipped a delicate equilibrium between them out of balance. The war may prod central banks to raise rates to fight the inflation it has worsened. Canada's bonds have remained relatively steady, but interest rates are rising.