Opinion
Hot inflation data and the absence of anything to suggest that the chokehold Iran’s closure of the Strait of Hormuz has on global oil supplies will be lifted has sent global bond yields surging, tightening global financial conditions and adding to the financial pressures on governments, businesses and households.
On Friday, after Donald Trump’s summit meeting with Xi Jinping failed to produce a concrete offer of help from China to reopen the strait, the oil price bounced above $US110 a barrel and global bond yields spiked.
Donald Trump’s summit meeting with Xi Jinping failed to produce a concrete offer of help from China to re-open the strait AP The global bond market is the world’s most important, and yields are rising worldwide. In the US, the two-year yield was 3.38 per cent and the 10-year yield, 3.94 per cent on February 27, the eve of the US and Israeli assault on Iran. Now they are 4.07 per cent and 4.59 per cent respectively. The 30-year yield, at 5.12 per cent, is the highest it has been since mid-2007, just ahead of the global financial crisis.
The yields on German bonds have similarly jumped over the same period, with two-year yields up 74 basis points and 10-year yields more than 50 basis points.
In the UK, the combination of the energy crunch and political dysfunction has produced even more dramatic movement.
Two-year yields have risen more than a full percentage point, 10-year yields are up 94 basis points, and, at 5.85 per cent, the 30-year yield is the highest since 1998 in the aftermath of the Asian Financial Crisis and, of course, amid an earlier bout of the UK’s recurring politic
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