Bond Yields Soar on Rising Oil Prices and Hawkish Policy

The global bond market is under pressure as the 10-year US Treasury yield hits a near 20-month high of 4.78%, while Japan's 10-year benchmark is closing in on 3%. The rise in yields has pushed up global term premiums and long-end yields, making borrowing costs more expensive.

The recent increase in oil prices above $90 a barrel, fueled by renewed fighting in the Middle East, has added to concerns about inflation. Federal Reserve chair Kevin Warsh has signaled that policymakers could move if price pressures fail to ease.

Wee Khoon Chong, APAC Macro Strategist at BNY, notes that 'the macro mix is turning more challenging for duration and risk assets.' Hawkish monetary policy, geopolitical risks, and rising fiscal concerns are driving up global bond yields.