GLOBAL MARKETS-Bond selloff deepens as rising energy prices stoke inflation fears

U.S. and European equity futures dipped, after Wall Street notched modest Monday falls, and the mood was nervous ahead of U.S. jobs data on Friday which could open the door to an interest rate-hiking cycle starting as soon as this month. "The macro mix is turning more challenging for duration and risk assets," said Wee Khoon Chong, APAC macro strategist at BNY. "Hawkish monetary policy, renewed geopolitical and inflation risks, and rising fiscal concerns are converging to maintain the upward pressure on global term premiums and long-end yields." Because the rise in borrowing costs has been global, it has offered only limited support to the U.S. dollar. The euro EUR= was steady at $1.1619 and the yen JPY= at 159.76 to the dollar. Preliminary inflation figures are due in Europe later on Tuesday. Selling drove global bond yields to major new highs on Tuesday as renewed fighting in the Middle East lifted oil prices above $90 a barrel and put pressure on stock markets around the world. Japan's 10-year benchmark JP10YTN=JBTC hit 3% for the first time in a generation. The 10-year U.S. Treasury yield, a benchmark for prices across asset classes, hit its highest since early 2025 at 4.78% and futures for French and German debt extended selling that earlier drove yields to 15-year highs. "I think there is now something of a sense of resignation — tinged with helplessness — about rising interest rates," said Ryutaro Kimura, a senior strategist at BNP Asset Management in Tokyo, of the march upward in Japanese borrowing costs, which for years have been a reliable anchor for world markets. Higher oil prices and rising U.S.-Iran tensions are stoking worries about inflation, which is negative for bonds, just as Federal Reserve Chair Kevin Warsh has reset expectations for the outlook. At the same time skyrocketing sovereign borrowing has investors starting to demand higher premiums for lending. Japan's Nikkei .N225 was pinned to flat by early afternoon and the Hang Seng .HSI fell 1%, with the weak tone set by the lacklustre debut of clothier Shein Global 0625.HK. Brent crude futures LCOc1, meanwhile, topped $91 a barrel in Asia trade while Europe's benchmark gas price TRNLTTFMc1 closed at a more than 3-1/2-year high on Monday. Conflict in the Middle East has left the energy and inflation outlook precarious and traders bracing for short-term rate rises. U.S. President Donald Trump has threatened further strikes against Iran after the first exchange of fire in a month while stepped-up fighting between Russia and Ukraine has wheat prices Wv1 trading close to three-year highs. GRA/ Markets are pricing an interest rate hike in New Zealand on Wednesday and an increase in Europe next week. Hikes this month in the U.S. and Japan are at better-than-even odds. In Hong Kong Shein shares slid 8% below an offer price already marked down from earlier fundraising rounds. The fast-fashion retailer, known for its $5 tops and $10 dresses, has been hit by tariff and duty changes in the U.S. and Europe that have eroded a key pillar of its low-cost business model.

GLOBAL MARKETS-Bond selloff deepens as rising energy prices stoke inflation fears

Stocks and currencies stay under pressure

Global bond yields jump as oil prices rise

Shein debut weak as energy and geopolitical risks persist

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