Oil futures rose for a fourth straight day as prospects faded for a deal to end the Middle East conflict, even as a deepening global bond selloff pushed borrowing costs in Europe, the U.S. and Japan to multi-year highs. The moves came as investors weighed persistent inflation risk against swelling government debt ahead of Wednesday's Federal Reserve minutes.
Oil futures extended their advance on Wednesday, climbing around 1% on the day. Few signs of progress emerged toward a deal to open the Strait of Hormuz, and the fourth consecutive daily gain came alongside a selloff in government bonds that sent yields to some of their highest levels in years.
Bond yields hit multi-year highs
German 10- and 30-year Bund yields climbed to fresh 15-year highs, with 10-year borrowing costs trading just above 3%. French 10-year yields rose to their highest levels in 18 years. The U.S. long bond yield steadied around 5.28% after touching nearly 5.34% on Tuesday, its highest level in nearly 20 years.
Japan's benchmark 10-year bond yield also climbed toward 3%, touching a three-decade high. Investors have grown wary of ballooning government debt and high inflation, a dynamic partly driven by the Iran war pushing up oil prices, according to Reuters.
Fed minutes and dollar in focus
The U.S. Federal Reserve was due to release minutes later Wednesday from its July meeting, where it left rates on hold. Chair Kevin Warsh offered few clues on how the central bank might respond to persistent inflation, unsettling markets.
A risk-averse mood lent some support to an otherwise softening dollar, though moves stayed small: the U.S. dollar index was last down 0.3% at 99.382. Separately, the U.S. is set to sell $16 billion in 20-year debt.
Source: Reuters
Trading involves risk.
Risk Disclaimer
