Bond sell-off deepens as oil rises above $108 - ft.com

A renewed sell-off in government bonds has coincided with oil prices pushing above $108 a barrel, according to the Financial Times. The pairing matters because both moves point in the same direction for inflation expectations: higher energy costs feed directly into headline inflation, while falling bond prices imply rising yields, or the compensation investors demand to hold fixed-income assets.

For markets, the key transmission channel is the discount rate. When yields climb, the present value of future corporate earnings falls, which tends to weigh on equity valuations, particularly for longer-duration growth companies. Higher oil also raises input and transport costs across sectors, compressing margins for businesses unable to pass those costs on to customers.

What to watch next is whether the oil move persists or fades, since a sustained rise would keep pressure on inflation data and central bank rate expectations. Also worth monitoring is the shape of the yield curve and whether the bond sell-off stays orderly or accelerates, as disorderly moves can tighten broader financial conditions beyond what any single data release would suggest.