Global Bond Markets Plunge: Middle East Conflict Fuels Inflation Fears, Rate Cut Hopes Dim

• Global bond markets are experiencing a sharp sell-off, with yields rising significantly, driven by inflation fears stemming from the Middle East conflict.
• The surge in energy prices, including Brent crude climbing from USD72 to USD92, is the primary trigger, disrupting earlier expectations of central bank interest rate cuts.
• Benchmark 10-year UK government bond yield rose to 4.62%, and the 10-year US Treasury yield reached 4.13%, marking substantial weekly increases.
• Traders are unwinding bets on imminent rate cuts; the Bank of England's expected cuts are now uncertain, and the European Central Bank might even consider hikes.
• The UK market is reacting more sharply due to its energy mix vulnerability, while the US is less affected as an oil and gas producer.