Ten-year US Treasury yields exceeded 5.034% on Tuesday, reaching the highest level since June 2007. This rise comes as a result of escalating oil prices, which are fueling inflation concerns among investors. The yield on Japanese ten-year government bonds also surpassed 3%, reaching 3.025%, the highest value since September 1996, while German ten-year Bunds reached 3.5557%.
The Houthi attacks from Yemen against Saudi Arabia on Monday aggravated oil supply concerns, with Brent rising 1.71% to $107.46 per barrel and US crude rising to $103.16. This context keeps markets on alert, with investors nervous ahead of decisive meetings by the US and Japanese central banks.
The US Federal Reserve begins a two-day meeting this week, with markets pointing to a 90% probability of an interest rate hike, the first since mid-2023. Morgan Stanley analysts forecast a 25 basis point increase on Wednesday and another in December, considering that the pace of disinflation has been slower than the Fed requires.
The rise in US and German benchmark bond yields has global repercussions, influencing the price of mortgages, corporate debt, and emerging market bonds. A sustained rise in these rates tends to attract capital to dollar-denominated assets, tightening financing conditions in more fragile economies and making refinancing more difficult for indebted governments and companies with lower credit ratings.
