A bond rout is deepening as inflation fears take hold of the Treasury market, threatening to raise borrowing costs across the US economy.
The 30-year US Treasury yield just hit 5.2%, its highest level since 2007, rising on worries about persistent price hikes because of the Iran war. Unsustainable government finances and interest rate hike fears have also sent investors pouring out of Treasury bonds. Yields rise when bond prices fall.
The war with Iran has ignited a global energy shock, with oil and gas prices at their highest levels in four years while the critical Strait of Hormuz remains effectively closed. That has started to seep out into other parts of the economy, including food prices and airfares.
“Bond markets are warning that inflation could prove much stickier than many investors anticipated,” Nigel Green, CEO at deVere Group, said in a note.
