The US 10-year Treasury yield returned to highs not seen since 2007 on Monday as faltering US-Iran diplomacy rekindled fears of higher-for-longer oil prices.
Brent crude spiked after US President Donald Trump dismissed negotiations with Tehran, but retreated on reports that Saudi Aramco had restored supply through its East-West pipeline. Yields are currently tethered to oil prices, which along with “sticky inflation expectations, resilient activity and heavy sovereign financing needs are combining to push global discount rates higher,” a market strategist told The Wall Street Journal, with elevated US inflation and solid labor figures expected this week.
“Our sense is that [bond] yields could grind higher,” an S&P Global Ratings analyst said: “We see the energy price shock continuing through 2027.”