Surging Oil Prices Spark Global Market Rout
Surging oil prices sent shockwaves through global markets on Friday, with Treasury yields hitting multi-year highs and Asian shares plummeting. The Brent crude price reached a four-month high of $109.97 a barrel before falling 0.6% to $107.
The threat of a protracted war between Saudi Arabia and the Houthi rebels has raised concerns about oil exports, with RBC Capital Markets' Helima Croft predicting that Brent could hit $121.99 a barrel later this year. The US and Iran have also traded attacks in the Strait of Hormuz, further restricting oil flows.
The surge in oil prices has led to a rise in inflation fears, causing bond yields to soar globally. The 10-year Treasury yield climbed as high as 4.9790%, its highest level in three years, while the 30-year yield reached a 19-year high of 5.3836%. US mortgage rates have also increased, hampering the housing market.
The Federal Reserve is expected to raise interest rates next week to combat inflation, which currently has a 70% probability. Analysts at JPMorgan now forecast eight out of nine developed-market central banks to hike interest rates by year-end.