Bond markets brace as oil climbs toward $100 a barrel
By Marc Jones
LONDON (Reuters) — World stocks were on track for their longest losing streak in two years on Thursday as the sight of oil prices heading for $100 a barrel compounded concerns about persistently high global interest rates.
There was brief respite from the dollar's strength in the currency markets but it was Wednesday's big drop in U.S. crude stocks that jangled the nerves of another supply-side shock just when the global economy needs it least.
U.S. crude had hit $95 a barrel for the first time since August 2022 while Brent prices were nudging up in early London trading again after they had hit a one-year high of $97.69.
It hoisted Europe's oil and gas stocks to the cusp of their highest since 2014 whereas the prospect of higher energy costs and sticky inflation piled pressure on bond markets.
Ten-year U.S. Treasury yields, which are the benchmark of global borrowing costs, were above 4.6% for the first time since 2007 having started September at 4%.
Triple-A Germany's yields were going higher again while Italy's news on Wednesday that its budget deficit was widening again sent its shorter-term 2-year yields to a fresh 11-year high.
«What we have got is a beautiful inflection point,» Mizuho's Head of Global Macro Strategies Trading, Peter Chatwell, said, explaining that markets were now sensing that both economic growth and inflation could stay strong next year.
«The repricing is applying some stress to credit spreads as well as other things,» Chatwell said. «If the higher rate environment persists it is potentially much more difficult to keep debt levels stable.»
Traders were also watching U.S. lawmakers' efforts to avoid a another government shutdown in Washington.
With European stocks down 0.4% and
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