$109 Oil Prices Spark Global Bond Rout and Rate Hike Fears

Global bond yields soared to new highs on Friday as surging oil prices fueled inflation risks. Brent crude climbed to a four-month high of $109.97 per barrel after a six percent overnight jump, capping a weekly gain of nearly 13 percent.

Oil flows through the Strait of Hormuz remained restricted due to US-Iran tensions and Houthi advances in Yemen's port of Mocha. This has raised the stakes for global markets, with investors pricing in more policy tightening from central banks worldwide.

JPMorgan analysts now expect eight out of nine developed-market central banks to hike interest rates by year-end, including the US Federal Reserve, the European Central Bank, and the Reserve Banks of Australia and New Zealand. The surge in oil prices has raised inflation fears, with the benchmark 10-year Treasury yield climbing two basis points to 4.9708 percent, its highest in three years.

The US dollar lifted with higher Treasury yields, gaining 0.4 percent against major peers overnight. Gold rose 0.3 percent to $4,328 an ounce after dropping nearly two percent the previous day, failing to catch safe-haven bids.