Oil Price Surge to $95 Triggers Global Bond Yield Spike

Oil prices surged to over $95 per barrel on Tuesday, pushing global bond yields to multi-decade highs as inflation and rate-hike fears intensified. The sharp rise in oil prices was driven by escalating tensions between the US and Iran, with American forces launching fresh strikes against Iranian targets.

The Reserve Bank of New Zealand (RBNZ) hiked its official cash rate 25 basis points to 2.75%, but lowered its 2027 forecast for the policy rate, taking short-term NZ yields sharply lower. The move weighed on the New Zealand dollar, which fell in the wake of the decision.

The European inflation accelerated, with Eurozone flash headline inflation rising to 3.3% year-on-year in August from 2.9% in July, driven mainly by energy prices. Core inflation was little changed, softening the print somewhat.