Finance · updated 1h ago · 2 min read
Brent Surges Above $107 as Middle East Conflict Fears Drive UK Bond Sell-Off
Brent crude exceeds $107 per barrel amid Middle East tensions UK gilt yields hit multi-decade highs as bond sell-off widens inflation fears
How strongly oil-price moves are linked to bond-market turmoil.
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The Guardian
“The global bond sell-off that has rocked markets in recent weeks resumed in response to the news from the Middle East”Read the original ↗
Bloomberg Línea
“la perspectiva de un conflicto prolongado está avivando los temores a una inflación impulsada por el sector energético”Read the original ↗
Guardian ties geopolitics directly to bond sell-offs; Bloomberg foregrounds energy-driven inflation fears.
Oil spikes roil bonds
Global oil prices surged as Middle East conflict fears intensified, with Brent rising 6% to above $107 on Thursday and driving renewed bond selling across big economies.
“The cost of a barrel of oil jumped 6% to above $107 on Thursday”
The sell-off pushed the yield on 10-year UK government bonds above 5.37%—the highest cost of borrowing since 2007—creating a fresh headache for the new chancellor, John Healey, as his first budget is due on 28 October.
In the US, Thursday’s sell-off pushed up the yield on 10-year borrowing to 4.92%—the highest since 2023—while 30-year yields hit the highest level since 2007.
The European Central Bank raised its main interest rate to 2.5% on Thursday, and ECB president Christine Lagarde said: "We believe inflation will be longer lasting than we had anticipated."
Central banks and warnings
Christine Lagarde added that "The conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period," as investors watched bond yields climb.
In London, the Guardian said the bond sell-off gathered pace as the yield on 10-year UK government bonds surged above 5.37%—and with less than seven weeks to go until Healey’s first budget on 28 October, higher interest rates on the UK’s debt-pile were set to raise the cost of future investment projects.T
In the US, the Guardian reported that policymakers at the Federal Reserve will meet under its new chair, Kevin Warsh, to set interest rates next week, with markets expecting a rise.T
The Guardian also quoted Kyle Rodda, a senior financial market analyst at the broker Capital.com, saying: "Ultimately, a sustained drop in long-end yields can only be achieved by genuine shifts in macroeconomic policy."T
Households face higher bills
Rising energy prices were already squeezing households, with the Guardian saying unleaded petrol prices had risen by 6p a litre since the start of September and that some banks had raised their mortgage rates.
“Unleaded petrol prices have already risen by 6p a litre since the start of September”
The Guardian warned that higher energy bills as oil and gas prices rise were likely to intensify pressure on the government to help consumers to weather the winter, while Healey promised to provide a "breathing space" for UK households.
In the US, the New York Times said the rise in energy costs threatens to push prices up more broadly, squeezing consumers and businesses already grappling with stubbornly elevated inflation.
The New York Times reported that the yield on the 10-year Treasury note jumped above 4.9 percent on Thursday—the highest level since 2023—and that the average 30-year fixed-rate mortgage hit 6.76 percent this week, according to Freddie Mac.