- Global bond sell-off resumes as surging oil prices stoke inflation fears, leading to increased borrowing costs.
- The US 10-year Treasury yield climbed to 4.9708%, marking its highest level since 2023.
- 30-year yields reached a 19-year high of 5.3803%, impacting U.S. mortgage rates and the housing market.
- Asian bonds extended the selloff, with Australia's 3-year yield hitting a 15-year high.
- Surging oil prices have raised concerns about inflation, prompting central banks to consider raising interest rates.
- The cost of a barrel of oil jumped 6% to above $107 amid concerns over potential disruptions to Saudi crude exports.
- Global bond yields spiked to new highs as soaring oil prices inflamed inflation risks, leading to a sell-off in share markets.
US 10-year Treasury yields surged to 4.9708%, the highest since 2023, as a global bond sell-off intensified, driven by rising oil prices. The cost of oil jumped 6% to over $107 a barrel, raising inflation concerns and prompting expectations of interest rate hikes from central banks worldwide.12
Nervous investors have been dumping government bonds, leading to increased borrowing costs. The 30-year yields reached a 19-year high of 5.3803%, impacting U.S. mortgage rates and the housing market. Analysts predict that eight of nine developed-market central banks will raise interest rates by year-end, including the U.S. Federal Reserve and the Bank of Japan.3
The European Central Bank has indicated that inflation may last longer than previously anticipated, with President Christine Lagarde stating, “We believe inflation will be longer lasting than we had anticipated.” The ongoing conflict in the Middle East is exacerbating inflation pressures, with Brent crude climbing to a four-month high of $109.97 a barrel.
As the sell-off continues, two-year yields rose to 4.5835%, reflecting market expectations of a 70% probability that the Fed will raise rates this month. The tightening is expected to remain shallow, but risks lean towards more action due to resilient growth and commodity price pressures.
“The 10-year yield climbed to 4.9708%, just shy of 5%, while 30-year yields hit a 19-year high of 5.3803%, lifting mortgage rates. Markets now price a 70% chance the Federal Reserve will raise rates this month, with JPMorgan expecting eight of nine developed-market central banks to hike by year-end.”
The Guardian
