Oil Prices Fuel Global Market Jitters Amid US-Iran Tensions
Global markets are mixed today as surging oil prices and Treasury yields weigh on investor sentiment. Asian bonds tracked Treasuries lower, with government bonds falling in New Zealand and futures pointing to losses in Japan and South Korea. The Reserve Bank of Australia is set to announce its policy decision later today.
The benchmark 10-year Treasury yield climbed as much as 11 basis points to 5.27%, a fresh 19-year high, before paring the advance. The 30-year rate jumped to 5.55%. Shorter-dated yields also rose as traders braced for the Federal Reserve to keep tightening policy to rein in inflation.
US oil prices rose 0.6% to $93.12 a barrel, while Brent settled near $105 a barrel on Monday. The Bloomberg gauge of the dollar rose and gold fell almost 4% to about $4,120 an ounce in the prior session.
Economists warn that elevated oil prices are adding pressure to global bond markets by keeping inflation risks alive and complicating the outlook for interest rates. In the US, stronger business activity and concerns over government debt have added fuel to the biggest Treasury selloff since President Donald Trump's April 2025 tariff rollout.
Chris Larkin at E*Trade from Morgan Stanley said, 'The broader market hasn’t been able to gain much traction because of rising yields and oil prices.' Ian Lyngen at BMO Capital Markets added, 'Our expectations remain that the conflict will be with markets for the foreseeable future and the global economy will continue adjusting to the realities of the supply disruptions.'
Investors will be watching a packed slate of US economic data this week for signs the economy remains strong enough to support further Fed tightening. Consumer confidence and August JOLTS figures are due today, followed by consumer-spending and inflation data and then payrolls on Friday.