Global bonds tumble as flaring inflation spooks investors
Bonds in Europe, the United States and Japan fell in tandem, sending yields to monthly highs. Investors fear that the inflation surge tied to the Iran war's impact on energy prices could push major central banks back towards tightening.
Selling pressure swept across global bond markets in early European trade. Germany's 10-year Bund yield reached 3.12%, the highest since March 2024, while the US 10-year Treasury yield climbed to 4.86% and Japan's 10-year hit 2.62%.
The trigger was a 4.9% jump in Japanese wholesale prices for April and rising fear that the energy shock driven by the Iran war will lift headline inflation again. Germany's economy ministry said the war will weigh on growth in the second quarter.
Investors are now focusing on the upcoming European Central Bank and Federal Reserve minutes. Market pricing has substantially cut the odds of any Fed rate cut by year-end, with traders now leaning towards a hold.
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