James Hirai

Traders boosted wagers on Bank of England and European Central Bank interest-rate hikes after surging oil prices reignited inflation fears.

Three consecutive downside inflation surprises and the slowest private-sector wage growth since 2020. It should be enough to convince investors that the Bank of England is entertaining interest rate cuts.

German bond yields rose to the highest level since 2011 as surging energy prices and mounting inflation expectations fueled bets on interest-rate hikes ahead of the European Central Bank’s decision later Thursday.

Only last month, Andrew Bailey again insisted quantitative tightening is here to stay. The Bank of England governor has been adamant the UK central bank needs to keep slashing its bond holdings to clear the decks for the next crisis and take interest-rate risk off its balance sheet.

Treasuries head for their best win streak in a month, buoyed by a sharp retreat in oil prices on optimism that talks between the US and Iran will lead to the resumption of tanker traffic around the Arabian Peninsula.

(Bloomberg) -- Treasuries extended their slide as traders braced for US inflation data that could cement concerns the Federal Reserve is dragging its feet on price growth.Most Read from BloombergStocks Fall as 30-Year Bond Yields Surge After Fed: Markets WrapUS Strikes Iran Again as Conflict Widens Across Middle EastWarner Bros. Deal Collapse Would Cost the Ellisons $9.8 BillionTrump Says US Will Strike Iran Hard as War Escalates AgainMeta’s Zuckerberg Defends AI Bets to Skeptical InvestorsUS yi

Treasuries are starting the week on an optimistic note, buoyed by tumbling oil prices and assurances that tens of billions of dollars in Japanese currency interventions won’t be funded from sales of US government debt.

Some of the world’s biggest central banks seem happy to let bond markets do their policy work for them.

A go-to trade in the UK gilt markets suggests investors are confident Prime Minister Andy Burnham will stick to his pledge to keep government borrowing in check.

Germany’s borrowing costs are poised to hit a 15-year high in a major sale of long-dated bonds as investors demand greater compensation for lending to increasingly indebted governments still grappling with inflation.