Global Bond Yields Reach 30-Year Highs
Government borrowing costs have skyrocketed to levels not seen in decades, with the yield on the 30-year Treasury bond hitting a 5.321% intraday high on Tuesday. The surge in bond yields has been driven by investors' concerns about the impact of the Middle East conflict on inflation and energy prices.
Oil Prices Soar as Iran Threatens 'Fully Offensive' Stance
Brent crude oil prices have risen for a third consecutive day, reaching $91 per barrel, amid Iran's warning of a 'fully offensive' military posture. The prospect of higher energy prices has spilled over into global fixed income markets, with the yield on the benchmark 10-year Treasury bond up 0.4 basis points to 4.7259%.
Equities Take a Hit
The selloff in global fixed income has weighed on equities, with MSCI's Asia-Pacific shares outside Japan off 0.7% and South Korea's KOSPI down 1.5%. The Nikkei 225 slumped 2.1%, while S&P 500 e-mini futures were down 0.3%.
Diplomatic Tensions Escalate
The diplomatic strains between the US and Iran have escalated, with US President Donald Trump threatening to bomb Oman if they 'get in the way' of negotiations around the future of the Strait of Hormuz. The Gulf state is the latest American ally to attract Trump's ire this week, following South Korea and Canada.
Market Outlook
The global market volatility is expected to continue, with investors remaining cautious about the impact of the Middle East conflict on inflation and energy prices. The US Federal Reserve's next move on interest rates will also be closely watched, with many expecting a rate hike to curb inflation.