Oil Price Surge Sparks Bond Sell-Off Ahead of Fed Meeting

The oil price is on the rise again after reports of Houthi strikes on Saudi Arabia and attacks on ships in the Gulf. Brent crude has surpassed $107 per barrel, but fuel prices have not increased accordingly.

This surge in oil prices is having a ripple effect on other markets, with sovereign bonds continuing to sell off. The 10-year Treasury yield has climbed above 5% and made a fresh 2007 high ahead of the Federal Reserve meeting tomorrow.

The market expects the Fed to hike rates, with a 92% chance of a 25bp increase in interest rates due to stubbornly high inflation that will be exacerbated by the recent oil price surge.