Global bond yields have reached multi-year highs, with US 30-year Treasury yields closing the week at their highest level since 2007, as reported by The Financial Times. The selloff was triggered by concerns that central banks will be forced to tighten policy to combat inflation amid persistently elevated oil prices. US 10-year yields jumped 14 basis points to 4.6% while 30-year yields rose 11 basis points to 5.12%, marking their highest level in a year. The latest developments show that Treasury 10-year yields hit 4.59%, with analysts noting that bullish calls on stocks will be challenged if Treasury 10-year yields hit 5%, a level that usually depresses price-to-earnings ratios. David Morrison at Trade Nation explained that the Treasury sell-off comes just after Trump's Federal Reserve chair pick, Kevin Warsh, was confirmed by the Senate, with the market having priced out rate cuts in 2026.
The market decline was compounded by back-to-back data this week showing mounting war-driven price pressures, prompting traders to boost bets on Federal Reserve hikes. As reported by The Hindu BusinessLine, with no end to the Iran conflict in sight, speculation has grown that the effective closure of the Strait of Hormuz will deepen energy disruptions that risk fueling inflation. President Donald Trump said he didn't push his Chinese counterpart Xi Jinping to pressure Tehran to revive Hormuz, offering no sign of a breakthrough in the standoff over the waterway. China believes the strait should be reopened as soon as possible, according to Foreign Minister Wang Yi. The latest developments show that war-driven price pressures continue to mount, with traders increasingly concerned about the potential for sustained inflationary pressures. Bank of America analysts noted that there probably isn't any historical precedent for the plethora of shocks buffeting the US economy, adding that it has become increasingly clear in the last few months that inflation is a problem.
Technology shares bore the brunt of the selling after leading gains from 2026 lows, with the Nasdaq 100 falling 1.54% as reported by The Hindu BusinessLine. Despite the broader market decline, the S&P 500 was on track for a seventh straight weekly advance - the longest winning run since December 2023. A pullback in chipmakers that had fueled a sharp rally since the end of March also dragged down the market Friday, with Applied Materials Inc. giving sales and profit forecasts that far exceeded analysts' estimates, fueled by soaring demand for AI computing and memory chips. The latest developments show that technology stocks continue to face pressure as investors reassess valuations amid rising bond yields and inflation concerns, with the Nasdaq Composite down over 1% marking a reversal from fresh all-time highs hit earlier in the week.
Brent oil neared $110, up 3.66% at $109.58, while WTI oil rose as reported by The Hindu BusinessLine, with the US Dollar index climbing to 99.30, its highest level since early April. The rise in oil prices comes after US President Trump's meeting with China's Xi Jinping, with investors not finding Trump's rhetoric about Iran and the Strait of Hormuz reassuring that the Middle East conflict will be resolved soon. Trump reported that China agreed to buy US oil, which could threaten the structural forces that are propping up oil price stability during the war, including the decline in China's oil imports and increase in US oil exports. West Texas Intermediate crude rose 3.9% to $105.12 a barrel as reported by The Hindu BusinessLine, while spot gold fell 2.3% to $4,544.84 an ounce. Bitcoin fell 2.6% to $79,241.84 and Ether dropped 3.2% to $2,223.36.
According to The Hindu BusinessLine, a bond market spooked by fears of accelerating inflation will be an early test for incoming Fed Chair Kevin Warsh. Treasury 10-year yields hit 4.59%, with analysts noting that bullish calls on stocks will be challenged if Treasury 10-year yields hit 5%, a level that usually depresses price-to-earnings ratios. Florian Ielpo at Lombard Odier Asset Management noted that while geopolitical advancements would help in the short term, inflation will take longer to come down, with Angelo Kourkafas at Edward Jones observing that risk sentiment is being dented by global rise in bond yields driven by inflation concerns and expectations for central-bank hikes. David Morrison at Trade Nation explained that this all reinforces expectations that the Federal Reserve, under the new chairmanship of Kevin Warsh, will be unable to loosen monetary policy further, something which is bound to annoy President Trump. The market has priced out rate cuts in 2026, a major shift from the two to three cuts expected at the beginning of the year, with investors now expecting rates to remain unchanged by year end.
