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Oil and bond yields surge as US-Iran conflict raises hedge fund risks
Brent rose 0.9% toward $95.50 a barrel while the 10-year US Treasury yield climbed to about 4.81%, a mix that can pressure long-duration equity strategies.
Renewed fighting between the United States and Iran is roiling global markets, with higher oil prices and a sharp rise in government bond yields creating a more difficult environment for hedge funds and other risk-focused investors, according to a Bloomberg report cited by Hedgeweek.
Brent crude climbed 0.9% to around $95.50 a barrel and was on track for a fourth advance in five sessions, as investors weighed concerns that further military escalation could disrupt energy shipments through the Strait of Hormuz.
The bond selloff has been especially consequential for long-duration exposures, Hedgeweek said. The 10-year US Treasury yield rose to around 4.81%, its highest level since late 2023, and global government bond yields have moved to their highest levels since 2008.
Equity markets also weakened, with the MSCI Asia Pacific Index down 1.8% to its lowest level in a week and the MSCI All Country World Index slipping to its lowest level in nearly a month. Hedgeweek added that markets have shifted rate expectations, with more than a 50% probability of a September rate increase from four major central banks and roughly a 70% chance of a Federal Reserve hike this month, alongside high pricing for actions by other central banks.
Latest closeWTI crude $90.70 ▲0.5%|Brent $95.32 ▲0.7%