Global bond sell-off resumes as surging oil prices stoke fears about inflation

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1. 4d ago

   Global Bond Sell-Off Resumes as Oil Prices Climb Above $105

   Global bond markets are experiencing a renewed sell-off as surging oil prices stoke inflation fears. The 10-year US Treasury yield has topped 4.9%, its highest level since 2023, and is approaching the 5% threshold. This volatility follows US crude oil hitting $100 for the first time since May and subsequently jumping above $105. Markets are reacting to persistent inflation pressures, with August annualized inflation remaining at 3.4%, while investors anticipate upcoming US inflation data to determine potential Federal Reserve interest-rate hikes next week.

   Why it matters

   Rising energy costs, driven by the Iran war, are inflating consumer prices and pushing up both short-term and long-term bond yields. This trend puts downward pressure on stocks, potentially driving US equities toward correction territory. The European Central Bank has already responded to these pressures by hiking rates again.

   What is confirmed

   • The 10-year US Treasury yield has exceeded 4.9%, the highest since 2023.
   • US crude oil prices reached $100 for the first time since May and have climbed above $105.
   • The annualized inflation rate for August was 3.4%, matching the July figure.
   • Core inflation, excluding food and energy, rose to 2.4% in August.
   • The European Central Bank has increased its interest rate.

   Still unconfirmed

   • Rising bond yields are driving US stocks toward correction territory.
   • The current market volatility is part of an ominous triple whammy hitting the globe.

   What to watch next

   • Release of new US inflation data
   • Federal Reserve interest-rate decision next week
   Sources used for this update (20)

   1. Bruegel — What is driving the global rise in long-term interest rates?
   2. WSJ — Stock Market Today: Dow Futures Gain, What to Watch — Live Updates
   3. NBC News — U.S. crude oil hits $100 for the first time since May
   4. CNBC — 10-year Treasury yield tops 4.9%, highest since 2023, as oil surge raises inflation fears
   5. WSJ — What Are Bond Yields ‘Saying’ About Stocks?
   6. Financial Times — Global bond sell-off reignites as oil jumps above $105
   7. Yahoo Finance — Nervy markets await US inflation data after ECB hikes rate again
   8. The Guardian — Global bond sell-off resumes as surging oil prices stoke fears about inflation
   9. Axios — Inflation pressures build
   10. Reuters — Global bonds buckle as surging oil prices inflame inflation risks
   11. marketplace.org — High oil prices are pushing up short-term bond yields
   12. Goldman Sachs — Why Global Bond Yields Are Expected to Stay Elevated
   confidence 95%