/images/ppid_59c68470-image-177906764797152021.webp)
/images/ppid_59c68470-image-177909756706135116.webp)
What is the story about?
Asian shares extended their losses from record highs as the deadlock continues over the Iran war, which lifted oil rates.
Asian equities slipped 0.2%. Futures on the S&P 500 Index were down 0.5% and for Nasdaq 100 declined 0.8%. The dollar held gains after reporting its best week since early march.
Brent crude rose more than 1% to around $110.50 a barrel, after adding almost 8% last week, with no progress in efforts to reopen the vital Strait of Hormuz and as President Donald Trump said the “clock is ticking” for Iran to strike a deal. Treasuries fell with the 10-year yield climbing one basis point to 4.61% as elevated oil prices fueled inflation and weaken the outlook for economic growth.
Japan’s 10-year government bond yield rose 10 basis points to 2.8%, while yields for Australia and New Zealand sovereign debt also climbed.
The weak open follows Friday’s global market selloff as fears grow that the effective closure of the Strait of Hormuz will keep oil prices elevated, fuel inflation and force central banks to keep interest rates higher as bond yields climb to multiyear highs. For months, investors had largely brushed aside those risks as equities surged on bets that billions of dollars spent on the AI rollout would drive corporate earnings growth.
Washington offered “no tangible concessions” while seeking “to obtain concessions that it failed to obtain during the war, which will lead to an impasse in the negotiations,” said Iran’s semi-official Mehr news agency.
Meantime, a drone attack sparked a fire at a United Arab Emirates nuclear plant, highlighting the risks to the fragile ceasefire.
High oil prices risk ushering a new era of elevated borrowing costs as war-driven inflation angst intensifies in global bond markets. Japan’s 30-year yield climbed to 4% for the first time since 1999 last week while US 30-year Treasury yields moved toward a two-decade high above 5%.
Finance ministers of the Group-of-Seven are set to discuss the debt selloff when they meet this week, though how they can ease pressure remains to be seen. The core issue remains the transit of oil through the Strait of Hormuz, a vital artery for the flow of oil and gas from the Middle East.
Elsewhere, the pound weakened in early trading after Wes Streeting said he would take part in any leadership contest to replace Keir Starmer and called for Britain to rejoin the European Union. The declaration follows Manchester Mayor Andy Burnham who announced he intends to run for parliament, opening a pathway to also challenge Starmer, which caused a rout in gilts last week in fears of possible expansionary fiscal policy.
In the latest announcement following Trump’s two-day summit in China, Beijing agreed to purchase at least $17 billion of agricultural products from the US annually through 2028, the White House said in a fact sheet detailing the meeting.
Attention will firmly be on the bond market, with a shift in wagers around the Federal Reserve. Traders now see an interest-rate hike as a lock by March, underscoring how the Iran war has flipped the bond-market narrative on its head since late February, when two quarter-point cuts were expected for 2026.
The key, investors say, is that the pressure on bonds will persist as long as the standoff in the Middle East staunches the flow of oil through the vital Strait of Hormuz.
With inputs from Bloomberg
Asian equities slipped 0.2%. Futures on the S&P 500 Index were down 0.5% and for Nasdaq 100 declined 0.8%. The dollar held gains after reporting its best week since early march.
Brent crude rose more than 1% to around $110.50 a barrel, after adding almost 8% last week, with no progress in efforts to reopen the vital Strait of Hormuz and as President Donald Trump said the “clock is ticking” for Iran to strike a deal. Treasuries fell with the 10-year yield climbing one basis point to 4.61% as elevated oil prices fueled inflation and weaken the outlook for economic growth.
Japan’s 10-year government bond yield rose 10 basis points to 2.8%, while yields for Australia and New Zealand sovereign debt also climbed.
The weak open follows Friday’s global market selloff as fears grow that the effective closure of the Strait of Hormuz will keep oil prices elevated, fuel inflation and force central banks to keep interest rates higher as bond yields climb to multiyear highs. For months, investors had largely brushed aside those risks as equities surged on bets that billions of dollars spent on the AI rollout would drive corporate earnings growth.
Washington offered “no tangible concessions” while seeking “to obtain concessions that it failed to obtain during the war, which will lead to an impasse in the negotiations,” said Iran’s semi-official Mehr news agency.
Meantime, a drone attack sparked a fire at a United Arab Emirates nuclear plant, highlighting the risks to the fragile ceasefire.
High oil prices risk ushering a new era of elevated borrowing costs as war-driven inflation angst intensifies in global bond markets. Japan’s 30-year yield climbed to 4% for the first time since 1999 last week while US 30-year Treasury yields moved toward a two-decade high above 5%.
Finance ministers of the Group-of-Seven are set to discuss the debt selloff when they meet this week, though how they can ease pressure remains to be seen. The core issue remains the transit of oil through the Strait of Hormuz, a vital artery for the flow of oil and gas from the Middle East.
Elsewhere, the pound weakened in early trading after Wes Streeting said he would take part in any leadership contest to replace Keir Starmer and called for Britain to rejoin the European Union. The declaration follows Manchester Mayor Andy Burnham who announced he intends to run for parliament, opening a pathway to also challenge Starmer, which caused a rout in gilts last week in fears of possible expansionary fiscal policy.
In the latest announcement following Trump’s two-day summit in China, Beijing agreed to purchase at least $17 billion of agricultural products from the US annually through 2028, the White House said in a fact sheet detailing the meeting.
Attention will firmly be on the bond market, with a shift in wagers around the Federal Reserve. Traders now see an interest-rate hike as a lock by March, underscoring how the Iran war has flipped the bond-market narrative on its head since late February, when two quarter-point cuts were expected for 2026.
The key, investors say, is that the pressure on bonds will persist as long as the standoff in the Middle East staunches the flow of oil through the vital Strait of Hormuz.
With inputs from Bloomberg
/images/ppid_59c68470-image-17790975392758593.webp)
/images/ppid_59c68470-image-177909761013323079.webp)
/images/ppid_a911dc6a-image-177909762267910937.webp)
/images/ppid_59c68470-image-177909753848981435.webp)
