Global bonds buckle as surging oil prices inflame inflation risks

According to Business Recorder, global bond yields moved to fresh peaks and equity markets slid on Friday as surging oil prices heightened inflation concerns. Investors rushed to factor in more monetary tightening from central banks worldwide. Brent crude hit a four-month high of $109.97 per barrel, having jumped 6% overnight and gained almost 13% over the week.

Shipping through the Strait of Hormuz stayed constrained as the United States and Iran exchanged strikes, while Houthi forces seized Yemen's port of Mocha, putting Saudi oil exports through the Red Sea at risk. RBC Capital Markets' Helima Croft, citing a resumption of full-blown Saudi-Houthi fighting, said Brent could reach $121.99 later this year. Remarks by President Donald Trump suggesting the conflict may run past the November midterms also unsettled investors.

Benchmark 10-year Treasury yields rose to 4.9708%, a three-year high, close to 5%, while 30-year yields reached 5.3803%, the highest in 19 years. Traders now assign roughly a 70% chance to a Federal Reserve rate increase this month, while analysts at JPMorgan see most developed-market central banks raising borrowing costs before the year closes. Higher yields pushed Asian shares lower, with MSCI's Asia-Pacific index excluding Japan down 1.8% and Japan's Nikkei off 2.8%, while gold edged up 0.3% to $4,328 an ounce.