Oil Price Surge Ignites Inflation Fears, Sending Bond Yields Soaring

Global bond yields soared to new highs on Friday as oil prices surged, sparking inflation concerns and prompting investors to bet on more aggressive interest rate hikes from central banks. The benchmark 10-year Treasury yield rose to its highest level in three years, while the 30-year yield hit a 19-year high.

The jump in oil prices was driven by tensions in the Middle East, with Brent crude climbing to $109.97 per barrel, its highest price in four months. Analysts warn that the situation could escalate further, potentially pushing oil prices above $121 per barrel.

Markets are now pricing in a higher probability of interest rate hikes from central banks, including the US Federal Reserve. JPMorgan analysts expect eight out of nine developed-market central banks to raise rates by year-end, including the Fed and the European Central Bank.