Bond Market Sell-Off Intensifies as Energy Prices Surge
The global bond market is experiencing a significant sell-off, driven by rising energy prices and inflation fears. The 10-year U.S. Treasury yield has broken resistance at 4.75% to stand at 4.78%, its highest since early 2025. Japan's 10-year benchmark hit 3% for the first time in a generation.
The sell-off is being fueled by higher oil prices and rising U.S.-Iran tensions, which are stoking worries about inflation. At the same time, skyrocketing sovereign borrowing has investors demanding higher premiums for lending.
Ryutaro Kimura, a senior strategist at BNP Asset Management in Tokyo, said 'I think there is now something of a sense of resignation, tinged with helplessness, about rising interest rates.' The rise in borrowing costs has been global, offering limited support to the U.S. dollar.
Markets are pricing an interest rate hike in New Zealand on Wednesday and an increase in Europe next week. Hikes this month in the U.S. and Japan are at better-than-even odds.