Global government bonds extended their selloff on Monday, pushing U.S. Treasury yields to their highest levels since February 2025. The rout is being driven by a surge in energy prices stemming from the ongoing conflict in the Middle East, which has intensified investor fears of persistent inflation.
Rising oil prices are stoking bets that global central banks, including the Federal Reserve, will be forced to maintain higher interest rates for longer, or even consider further hikes, to combat inflationary pressures. The market is now pricing in a greater than 50% probability of a Federal Reserve rate increase by the end of the year, a significant shift in expectations that is weighing on investor sentiment across asset classes.
Market Impact: S&P 500 Futures fell 0.64%, Nasdaq Futures dropped 0.63%, and Dow Futures slid 0.87%. Bitcoin declined 1.82% and Ethereum fell 3.25% since the last session close.