Asian Bonds Extend Losses Amid High Oil Prices

A global bond selloff is set to deepen in Asia as oil prices remain high and stoke inflation concerns. Long-term Treasury yields have reached multi-decade highs, pushing expectations for further Federal Reserve interest-rate hikes.

The Australian and New Zealand 10-year government bonds slipped in early Asian trading, while futures pointed to losses for Japanese debt. The yield on a global bond index hit 4% for the first time since 2007.

Oil prices remained a source of pressure, with Brent settling at $106.60 a barrel. However, some relief came as US crude edged lower Friday, following US and Iranian negotiators' exploration of a phased deal that would see Tehran reopen the Strait of Hormuz and Washington lift its blockade of Iranian ports.

Byron Anderson at Laffer Tengler Investments said, 'We are firmly set up for higher yields in this environment.' He added, 'Rate hikes do not solve Iran, oil, the AI boom, or inflation. They do increase borrowing costs for everyone else in the market, which will eventually hit labor and the consumer if the Fed gets aggressive.'

The latest rise in yields extended a sharp repricing since the start of the US-Iran war. Two-year Treasury yields have climbed more than 150 basis points over that period, while 30-year yields are up more than 80 basis points.