Global bond sell-off resumes as surging oil prices stoke fears about inflation
Crude jumps above $107 a barrel amid concerns over Middle East conflict and out-of-control government borrowing
TL;DR
- Investors are dumping government bonds, increasing borrowing costs due to fears of rising inflation fueled by surging oil prices.
- Oil prices jumped to over $107 a barrel amid concerns about Middle East conflict and potential disruptions to Saudi crude exports.
- The European Central Bank raised its main interest rate to 2.5% and signaled that inflation will remain above target for an extended period.
- In the UK, 10-year government bond yields surged to their highest level since 2007, increasing borrowing costs for the government.
- In the US, 10-year borrowing yields reached their highest level since 2023, and 30-year yields hit their highest since 2007.
- US Treasury Secretary Scott Bessent's intervention to buy back debt did not deter investors from deepening the sell-off.
- The Federal Reserve and Bank of England are scheduled to meet next week, with markets expecting a potential interest rate hike from the Fed.