Global bond sell-off deepens as $100 oil stokes stagflation fears

Global borrowing costs came under further pressure on Friday as soaring energy costs clouded the economic outlook for many countries.

The yield on , seen as the euro area benchmark and a traditional safe haven, crossed 3.5% for the first time since April 2011, according to LSEG data.

The note yield, crucial for credit cards and mortgage rates, nudged slightly higher after .

Japan's jumped 6 basis points on Friday, though it remained just shy of the . Yields were broadly higher across Asia Pacific, with Australia's 10-year up 12 basis points and South Korea up 8 basis points.

Oil prices eased on Friday, but remained around the $100-a-barrel threshold, with international benchmark futures at $105.4 a barrel, while European natural gas futures hit their highest level since 2022.

Investors are nervous about the mounting debt loads and spending plans of rich countries around the world, and analysts at Deutsche Bank said "fears about stagflation" — low economic growth and high inflation — were rippling through multiple asset classes.

Deutsche flagged a host of concerns, including continued shipping obstructions on the Strait of Hormuz and Red Sea, lower Saudi Arabian oil output, and hawkish commentary from the European Central Bank when it .

"Comments from Donald Trump suggest the chances of any diplomatic progress [with Iran] before the midterm elections in the U.S. are looking slim, leaving markets to confront the prospect of oil prices remaining elevated for at least a couple of months," AJ Bell investment director Russ Mould said in a Thursday note.

Kim Fustier, senior global oil and gas analyst at HSBC, said this week that the market was adjusting to a "new normal" in which the Strait of Hormuz was "neither fully closed nor fully open, but persistently impaired. "

"If diplomacy fails and Hormuz flows stay near current levels, inventories could draw toward operational lows," and Brent crude could rise to around $120 a barrel, Fustier said.

She added that, under such a scenario, Brent crude prices would likely only ease in response to weaker demand and greater non-OPEC supplies in the third quarter of 2027.

France on Thursday