Oil price surge and inflation worries push bond yields to multi-year highs

Oil prices have risen above $92 per barrel, stoking inflation fears and pushing U.S. bond yields to their highest since January 2025. The 10-year Treasury yield reached 4.79%, and global bond markets also sold off. Stock indices fell, with the S&P 500 down 0.7% and the Nasdaq off 1.4%.

EXPANDED:

The immediate trigger for the market turmoil is geopolitical, with the U.S. military striking rocket launchers on an Iranian island and the UAE intercepting an Iranian drone. This has curtailed traffic through the Strait of Hormuz, a chokepoint for roughly 20% of global oil shipments, pushing Brent crude to $92 and U.S. benchmark crude to $87.67. Domestically, the AAA reports that August's average gasoline price exceeded $4 per gallon every single day, marking the most expensive August on record, even surpassing the 2022 supply chain crunch.

The bond sell-off is a global phenomenon, with Japan's 10