Global Bond Selloff Deepens as Oil Rally Fans Inflation Fears

A global selloff in government bonds deepened on Friday as rising oil prices fueled concerns that inflation may remain stubbornly high, prompting traders to reassess central bank rate-cut expectations. The British pound also came under pressure, heading for its worst week against the US dollar since 2024, as UK Prime Minister Keir Starmer faced growing challenges to his leadership.

The bond rout accelerated as Brent crude extended its rally above $80 a barrel, stoking fears that higher energy costs could feed through to broader price pressures. For energy commodities traders, the correlation between oil and bond yields is a key dynamic to watch: when inflation expectations rise, bond prices fall and yields climb, which can in turn strengthen the US dollar and weigh on dollar-denominated commodities. Traders can track these real-time price moves on NowPrice's live fuel dashboard.

Looking ahead, market participants will focus on next week's central bank commentary, particularly from the Federal Reserve, for any signals on how policymakers view the inflation outlook. The Trump-Xi summit concluded with both leaders touting stronger US-China ties, but traders will be watching for concrete trade deals that could affect global demand for energy. Any further political developments in the UK could also keep sterling under pressure, indirectly supporting the dollar and adding headwinds to oil prices.