A surge in oil prices, nearing $100 per barrel, has triggered a global bond sell-off, raising fears of inflation and altering interest rate expectations. Key bond yields, including the German 10-year Bund, have reached multi-year highs, with the U.S. Treasury yield also climbing. This movement reflects concerns over prolonged inflation and potential geopolitical risks, particularly relating to tensions between the U.S. and Iran. Analysts suggest that investors may need to reconsider their strategies in light of these developments.

Accessibility help Skip to navigation Skip to main content Skip to footer

Add to myFT

Get instant alerts for this topic

Manage your delivery channels here Remove from myFT

Oil price surge drives global bond sell-off

Brent crude’s rise towards $100 is threatening a prolonged surge in inflation and resetting interest rate expectations

A small boat moves quickly past a large anchored tanker in the Strait of Hormuz, with choppy blue water in the foreground. A ship in the Strait of Hormuz. US Treasury yields are close to their Iran war peak © AP

current progress 0%

Kate Duguid in New York and Ian Smith and Emily Herbert in London

Published35 minutes ago

Jump to comments section Print this page

Stay informed with free updates

Simply sign up to the Sovereign bonds myFT Digest -- delivered directly to your inbox.

A global bond sell-off deepened on Thursday, sending German 10-year yields to a 15-year high, as a surge in oil prices reignited fears of an inflation shock.

The 10-year Bund yield rose 0.02 percentage points to 3.21 per cent, its highest since 2011, and US Treasury yields advanced close to their Iran war peak, as the prospect of a lasting increase in oil prices redraws expectations for central bank interest rates.

The benchmark 10-year Treasury yield, which determines interest rates on a host of debt including mortgages and government borrowing, rose to as high as 4.68 per cent in early trading, taking it within touching distance of the 4.69 per cent reached at the start of the Iran conflict.

Other global bond yields set multiyear highs after grinding higher throughout the week, with the 10-year French bond yield touching 4 per cent for the first time since 2009. Bond yields rise when prices fall.

Line chart of 10-year bond yields (%) showing Bond yields climb to multi-year highs

Yields have drifted higher alongside oil prices, with Brent crude up from just above $70 a barrel in early July to as much as $98.42 a barrel on Thursday, as strikes between the US and Iran re-escalate and global inflation fears deepen.

“Investors just wanted to move on and forget about Hormuz but that always felt like wishful thinking,” said Mike Bell, head of market strategy at RBC BlueBay Asset Management. “Sticking one’s head in the sand isn’t a strategy for dealing with political risk.”

Reuse this content(opens in new window) CommentsJump to comments section

Follow the topics in this article

Middle East war

Add to myFT

Sovereign bonds

Add to myFT

US Treasury bonds

Add to myFT

Commodities

Add to myFT

Comments

Close side navigation menu

Search the FTSearch

Subscribe for full access

Read Original at Financial Times →