Global Bonds Tumble as Oil Surge Renews Inflation Fears

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5▲0 ▼3Impact / 5
Summary · why it matters

Global bonds are being pummeled by a resurgence in energy prices, with the average yield on the Bloomberg Global Treasury Index surging to 3.68%, the highest since the 2008 global financial crisis. Benchmark UK gilt yields have closed above 5% for the longest stretch in almost two decades, Germany's 10-year yield is at its highest since 2011, and Japanese yields are near levels last seen in the 1990s. The selloff comes ahead of key central bank decisions next week from the Federal Reserve, Bank of Japan, and Bank of England, with oil prices climbing above $100 a barrel on Thursday. Traders are also grappling with new Fed Chairman Kevin Warsh's reduced forward guidance, which has raised the market-implied probability of a rate hike at the July meeting to one-in-three. The pressure on bonds has pushed the iShares 20+ Year Treasury Bond ETF down almost 5% over the past month, and it has now lost more than half its value since 2020.

Impact on assets 5

Financials▼
Bank of Japan
8301
± MixedMonetaryrelevance

BOJ is mentioned as having a key decision next week; rising yields may influence policy but impact unclear.

Bank of America Corp
BAC
▼ NegativeMonetaryrelevance

Rising bond yields and rate hike expectations pressure bank net interest margins and bond portfolios.

Barclays PLC
BARC
▼ NegativeMonetaryrelevance

Rising bond yields and rate hike expectations pressure bank net interest margins and bond portfolios.

Digital Finance & Tokenization▼
BlackRock Inc
BLK
▼ NegativeMonetaryrelevance

Bond selloff reduces value of fixed-income holdings, hurting asset manager performance.

Cloud & Digital Infrastructure▲