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Oil Shock Pushes 30-Year Treasury Above 5.1%

Hot inflation plus higher oil prices pushed investors to price in a possible Fed rate hike.

Overview

  • U.S. Treasury yields jumped Friday, with the 10-year near 4.57% and the 30-year around 5.12%, marking roughly one-year highs after a week of hot inflation data.
  • Brent crude climbed to about $108–$109 a barrel and WTI topped $104 after President Trump’s Beijing summit with Xi produced no concrete steps to reopen the Strait of Hormuz.
  • Traders now assign roughly a 40%–50% chance that the Federal Reserve will end the year with rates higher than today, up from about 14% last week, according to CME FedWatch.
  • U.S. stocks fell more than 1% in early trading, with the S&P 500 and Nasdaq retreating from records as rising yields undercut the recent tech-led rally.
  • The sell-off in bonds spread worldwide, lifting benchmark yields in the U.K., eurozone, and Japan, which tightens borrowing costs for governments and households and risks higher prices at the gas pump.