Global Bond Selloff Sends US Yields Near 5% Amid Oil Price Surge
A global bond selloff is pushing U.S. Treasury yields toward 5% as inflation fears rise due to oil prices surging past $100 a barrel and increased odds of a near-term rate hike.
The European Central Bank raised rates on Thursday, warning that price pressures could be lasting, while data showed U.S. producer prices rose in August, stoking bets for an imminent Fed rate hike next week.
Balloon government borrowing across developed markets is also causing concern, with investors demanding higher compensation to hold sovereign debt.
According to Mansoor Mohi-uddin, chief macro strategist at Bank of Singapore, 'We're seeing a perfect storm of higher oil prices, more inflation fears, central bank hawkishness and ongoing concerns over fiscal deficits all combining to push global yields higher.'