Global Bond Yields Hit Multi-Year Highs as UK Gilts Top 5.2%

  • Renewed U.S.-Iran hostilities and Middle East energy-flow risks pushed Brent crude above $91 a barrel, lifting global yields and pressuring risk assets.
  • UK 10-year gilt yields topped 5.2% at their highest since June 2008, while the 10-year Treasury yield reached 4.78% and Schiff cited 5.15%, 6.44% and 8.03% as possible thresholds.
  • Markets priced about 32 basis points of BoE tightening by year-end and roughly 66% odds of a September Fed hike as inflation and higher-for-longer rate concerns intensified.

Global bond yields rose to multi-year highs during a broad sell-off as renewed U.S.-Iran hostilities and Middle East risks pushed Brent crude above $91 a barrel, intensifying inflation concerns and expectations that interest rates will remain higher for longer. UK 10-year gilt yields exceeded 5.2%, their highest level since June 2008, while the 10-year U.S. Treasury yield reached 4.78% and Japan’s 10-year yield approached 3%. Markets priced roughly 65%-66.4% odds of a September Federal Reserve rate increase after Chair Kevin Warsh said the Fed still had "work to do," while investors priced about 32 basis points of Bank of England tightening by year-end, an almost 70% chance of a November hike and roughly 80% odds of a second increase by February. Peter Schiff described Treasuries as being in a structural bear market and cited 5.15%, 6.44% and 8.03% as potential 10-year yield thresholds if earlier highs are breached. German and French long-term yields reached 15-year highs, the 30-year Treasury yield reached a 19-year high this month, technology shares faced pressure from higher discount rates, and UK shop-price inflation reached a two-year high.

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