Energy Prices Surge, Global Markets on High Alert for Rate Hikes
A surge in energy prices has sent shockwaves through global markets, driving up borrowing costs and prompting central banks to consider interest rate hikes. The jump in oil and gas prices comes as investors await decisions from key central banks, including the Federal Reserve, European Central Bank, and Bank of Japan.
U.S. 10-year Treasury yields hit their highest since 2023 on Wednesday, reaching 4.8%, while world crude and natural gas prices climbed. This has added to the budgetary and political pressures for many governments as winter approaches.
New Zealand's Reserve Bank was the first central bank to pull the trigger this month with its second consecutive rate rise, but more dovish noises about what happens after that knocked back the kiwi dollar.
Attention will now shift to U.S. labor market data this week, although it is considered a secondary influence on the Fed at the moment, behind above-target inflation.