Oil Surge Triggers Global Bond Sell-Off and Interest Rate Hikes
Surging oil prices have ignited concerns about inflation and sparked a sell-off in global bond markets, pushing yields to multi-year highs.
Crude futures have reached a four-month high of $US109.97 per barrel due to fresh attacks on key shipping routes in the Middle East and Yemen's Houthi attacks on Saudi oil facilities.
The US benchmark West Texas Intermediate (WTI) crude price is also near multi-month highs at $US103.57 per barrel, with some analysts warning that it could retest its high of $US119.48 from early March.
Investors are bracing for more aggressive interest rate hikes worldwide as central banks try to manage another wave of inflation, with the European Central Bank (ECB) lifting rates by 25 basis points overnight and revising its inflation forecasts higher for 2027 and 2028.
The threat that higher oil prices pose to inflation over the short and medium term has resulted in bond prices falling and yields surging to multi-year highs this month, with India's 10-year government bond yields hitting 7.0038% on Friday.