Bond yields snap higher in the US, France and Japan as the prolonged Hormuz closure pushes oil above $100, Le Monde reports
Le Monde reported that US 10-year Treasury yields broke above 4.5 percent on May 13 for the first time in a year, Japanese 10-year yields hit 2.7 percent — their highest since the 1990s — and French 10-year yields neared 3.8 percent, level with their 2009 highs, as the prolonged closure of the Strait of Hormuz kept oil durably above $100 a barrel. Markets, Rexecode economist Anthony Morlet-Lavidalie told the paper, have concluded the crisis is not as transitory as they first thought; Natixis analysts said "le marché obligataire perd patience." The repricing follows Iran's May 15 announcement that it considered the strait a joint Omani–Iranian waterway and was preparing a toll regime, and earlier UK demand-side hits — Heathrow traffic down 5 percent in April and Tui logging a 10 percent drop in UK summer bookings.
Sovereign bond yields jumped sharply across the developed world in mid-May as the prolonged closure of the Strait of Hormuz kept oil prices durably above $100 a barrel and forced markets to reassess inflation, Le Monde reported. US 10-year Treasury yields broke above 4.5 percent on May 13 for the first time in a year. Japan's 10-year yield reached 2.7 percent, its highest reading since the 1990s. France's 10-year yield approached 3.8 percent, matching its 2009 peak after a brief touch at the same level in late March.
Rexecode economist Anthony Morlet-Lavidalie told the paper that markets had revised away their initial assumption that the crisis would pass quickly: "les marchés financiers se disent que la crise n'est finalement pas aussi passagère qu'ils ne l'imaginaient au début." With Brent sitting durably over $100 a barrel — €86 — he said inflation was now a mechanical certainty, and the live question had become "la hauteur de la vague." Natixis analysts captured the bond-market response in a single line: "le marché obligataire perd patience."
The repricing followed Iran's May 15 announcement that it regarded the strait as a joint Omani–Iranian waterway and was preparing a formal toll regime, formalising the chokehold that had until then been treated by traders as temporary. UK demand-side data through April had already shown the cost passing through: Heathrow logged a 5 percent fall in passenger traffic, IATA on May 13 warned European airfare rises were unavoidable, and Tui reported UK summer bookings down 10 percent on the same conflict.