BlackMask Breaking News

Global bond yields climbed back to the highest level in almost two decades as rising oil prices fueled inflation concerns and investors ramped up expectations for interest-rate hikes. The move started on last Friday after Federal Reserve Chairman Kevin Warsh doubled down on his vow to finally tame inflation, and was extended this week as energy prices rose on renewed conflicts in the Middle East. The rate on 10-year Japanese government notes touched 3% for the first time since 1996, UK 30-year yields reached the highest since 1998 and the 10-year Treasury rate hit levels last seen January last year. The yield on a Bloomberg gauge of global sovereign bonds advanced for a fourth straight session on Monday, rising to 3.72%, the highest since mid-2008. “Markets are pricing in a higher path for short rates in the US, but also globally,” Idanna Appio, a portfolio manager and senior research analyst at First Eagle Investments, said on Bloomberg TV. “Investors are beginning to reassess what neutral policy rates look like and there has been a gradual increase in those.”

Global bonds have been under pressure for months, with worries over elevated government spending in markets like Japan, the UK and the US prompting investors to seek higher compensation to own longer-maturity debt. At the same time, a surge in borrowing by US technology firms to fund artificial intelligence is potentially crowding out demand for sovereign bonds. Meanwhile, fresh hostilities between the US and Iran have raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz, sending oil prices higher. Several current and former officials have said they expect the Middle East conflict to drag on for months. “The direction of travel is going to be higher yields from here,” said Laura Cooper, global investment strategist at Nuveen. “Term premium likely has to be higher to compensate for this confluence of risks.” Traders are currently pricing an almost 70% chance that the Federal Reserve hikes rates by a quarter-point at its meeting this month, an increase from the European Central Bank is fully priced in for next week, while they’re all but certain the Bank of Japan will hike later this month. The bond selloff poses a fresh challenge for Treasury Secretary Scott Bessent, who last month unleashed more measures to keep yields contained, as well as for President Donald Trump, with higher borrowing costs threatening to weigh on the economy heading into the November midterms. Pressure on bonds is unlikely to ease, if seasonality is any guide. September and October have been the worst months for the global bond index over the last decade, with the gauge losing more than 1% on average in each of the two months during the period, according to data compiled by Bloomberg.

NN; I am hoping to get some more strips over 6% in the October yield surge.

The US and Iran exchanged strikes for the first time in about a month as American forces hit Iranian rocket launchers and the Islamic Republic responded by firing missiles toward Jordan. Captain Tim Hawkins, a spokesperson for US Central Command, said Sunday that Iran was preparing to launch rockets carrying mines into the Strait of Hormuz. He added that American “forces are monitoring the area closely and remain prepared to protect the free flow of commerce through this essential waterway.” Iran’s Islamic Revolutionary Guard Corps launched a missile-and-drone attack on US air bases in Jordan early Monday in retaliation for the American airstrike, state-run IRNA reported in a post on X. Jordan’s military intercepted eight missiles after they breached the kingdom’s airspace, destroying them before they caused any damage, the Jordan News Agency reported. The end of weeks of relative calm on the military front sent oil prices higher. Brent crude climbed 2.4% to above $90 a barrel. The US attack was the first military action against Iran since late July, as President Donald Trump has shifted toward an economic pressure campaign aimed at winning concessions from Tehran. Countries with ties to Tehran have so far shrugged off sanctions threats, and analysts have been underwhelmed by early US actions. Last week, the US military said it finished clearing mines from shipping routes in the strait, which previously carried one-fifth of the world’s oil and liquefied natural gas.

US allies, however, have privately warned that the strait was still likely mined.

Foreign Minister Abbas Araghchi said last week that Iran remains open to resuming diplomacy with the US, but argued that progress depends on Washington abandoning its pressure campaign. Following what he described as “creative discussions” with Qatar, a mediator in the conflict, Araghchi said in a social media post that progress “hinges on US understanding of one simple fact: Pressure doesn’t work.” Treasury Secretary Scott Bessent promised an “economic onslaught” against Iran and its trading partners. That includes China, which buys 90% of Iran’s oil. He said the White House would be discussing with allies their plans to stop buying Iranian products, but so far there have been no agreements to do so. Bessent told the Associated Press ahead of the Group  20 finance ministers meeting in North Carolina that the US would impose sanctions this week on a second bank that does business with Iran. Last week, Treasury proposed a rule that would sever the Emirati branches of Banque Misr, Egypt’s second-largest bank, from the US financial system. “This is going to be financial violence if we have to,” Bessent said.

NN:  Sounds pretty desperate to me. Remember the money ball oil is not  flowing. And prices are riseing and supplies are getting tighter by the day.