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Gulf tensions revive stagflation fears as oil tops $100
Reuters says new U.S. tariffs of 10% and 12.5% on goods from 60 partners are adding to price pressure as energy shocks lift bond yields across major economies.
Renewed hostilities in the Gulf have brought stagflation concerns back to the forefront, Reuters reported, denting hopes that a U.S.-Iran interim arrangement could prevent inflation from rising alongside weak growth. Oil prices have returned to around $100, and European gas is on track for its largest monthly increase since March, while government borrowing costs hit multi-year highs as inflation anxiety escalates.
The pressure has also spread beyond oil markets. Brent crude climbed back to $100 after Yemen's Houthis said they struck two Saudi oil tankers in the Red Sea, extending disruption to global shipping beyond the Strait of Hormuz, and oil is up almost 40% in July with its biggest monthly jump since March expected. Benchmark European natural gas futures are also at their highest since March.
Reuters added that tariff friction is further raising uncertainty for consumers, businesses, and investors. On Friday, the U.S. imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the European Union and China, a move economists said could feed through to higher prices.
Despite June U.S. inflation coming in below expectations last week, the latest energy rally quickly pushed government bond yields higher, Reuters said, lifting rates from the U.S. to Japan and Germany. Traders are also watching whether central banks will need additional rate hikes, while Kpler estimates about a third of the world's fertilisers pass via the Strait of Hormuz, a factor that could keep food prices elevated longer and weigh on more vulnerable emerging markets.
Latest closeWTI crude $90.47 ▼1.9%|Brent $98.38 ▼2.3%|Nat gas $2.908 ▼0.3%