Global Bond Yields Soar on Crude Oil Price Spike

Global bond yields have spiked sharply on Tuesday due to inflation fears triggered by elevated crude oil prices. The US 10Y yields reached a high of 4.78%, last seen in October 2023, while the 2Y bond yields climbed back to December 2025 levels of 4.3%. This indicates heightened expectations of an imminent rate hike in the upcoming policy meeting.

The sharp increase in crude oil prices can be attributed to renewed hostilities between the US and Iran, which raised concerns about supply disruptions in the region. The Brent crude oil futures surged beyond $94 per barrel for the first time in 10 days, while WTI crude oil prices touched $90 per barrel mark on Tuesday.

Elevated crude oil prices have raised sticky inflation concerns globally, increasing the probability of rate hikes. According to CME Fedwatch tool, there is more than a 60% chance of a rate hike in the September policy meeting.