Bond selloff deepens as inflation, oil prices jolt markets

Business Recorder reported that global bond prices dropped sharply on Wednesday, deepening a sell-off that has lifted borrowing costs to multi-decade peaks. Higher energy prices linked to the Middle East conflict have added to worries about inflation and rising public debt. Sovereign yields act as a benchmark for asset prices, so higher rates tend to feed into mortgages and government spending plans.

US 10-year Treasury notes now yield 4.81%, near a three-year peak, while Japan's 10-year yield has moved above 3%, a level not seen in 30 years. Australia's 10-year yield reached 5.198%, its highest in more than 15 years, and British yields hit their highest since 2008 on Tuesday. German bund futures slipped to their lowest since 2011 and French government bond futures touched a record low.

Brent crude contracts edged up 1% on Wednesday, reaching $95.61 a barrel, a day after a gain of almost 6%. Two-year US Treasury yields reached 4.41%, the loftiest since January 2025, as hawkish remarks by Fed Chair Kevin Warsh last week prompted traders to raise bets on US rate increases. Markets have already priced in a European rate increase next week, while the odds of a US increase the following week stand at about 68%.