Global bond yields surged on Thursday, with the 10-year US Treasury yield reaching 4.93%, its highest level since October 2023. This sell-off was fueled by concerns over resurgent conflict potentially disrupting global oil supplies, pushing Brent crude above $105 per barrel and US crude to $100 per barrel for the first time since May before paring back slightly to $99 per barrel. The rising oil prices intensified anxieties about inflation and prompted expectations of further central bank rate hikes.
European bond markets also felt the pressure, although some respite was noted as steadier oil and gas prices helped temper the selling. Germany's 10-year bond yield hovered at 3.43%, a level not seen since April 2011, while France's OAT yield hit 4.335%, a post-2008 high. The UK's 10-year and 20-year yields neared post-2007 and 1998 highs of 5.26% and 5.87% respectively. These movements occurred as markets anticipated a second rate hike of the year from the European Central Bank (ECB).
Despite the US Treasury Department's announcement to buy back up to $6 billion in bonds to ease yield pressure, some investors found the scale insufficient. Analysts like Keith Patton from Columbia Threadneedle expressed skepticism about the coherence of policy, especially after a campaign promise of a $5,000 "Trump dividend." The re-escalation of conflict and the breakthrough of Brent crude past the $100 psychological mark, reaching $105 per barrel, were seen as significant events, suggesting continued inflationary pressures and keeping investor attention firmly on the bond market.
