Global Bond Yields Soar on Surging Oil Prices

Global bond yields soared to new highs on Friday as surging oil prices fueled inflation risks worldwide. Brent crude jumped to a four-month high of US$109.97 a barrel, capping a weekly gain of nearly 13%. The spike in oil prices has raised the stakes for US consumer price data due later this month, which could seal the case for a Fed rate hike next week.

The benchmark 10-year Treasury yield climbed to its highest level in three years at 4.9708%, while the 30-year yields scaled another 19-year top of 5.3803%. Two-year yields rose by 2 basis points to 4.5835% as markets ramped up bets on a rate hike from the US Federal Reserve.

Asian stocks suffered significant losses, with MSCI's broadest index of Asia-Pacific shares outside Japan plummeting 1.8% and Japan's Nikkei tumbling 2.8%. The rout in the bond market was partly due to a Treasury buyback programme that fell short of expectations.