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

The simultaneous move in two major asset classes tells the story: government bonds sold off further while crude oil pushed above $108 a barrel. That combination matters because oil is a key input to headline inflation, and when energy prices climb, bond investors often demand higher yields to compensate for the risk that inflation stays elevated for longer. Falling bond prices and rising yields are two sides of the same coin.

The dynamic is self-reinforcing. Higher oil raises near-term inflation expectations, which pressures bond prices lower; rising yields then tighten financial conditions across mortgages, corporate borrowing and equity valuations. That is why a deepening sell-off in fixed income rarely stays contained to the bond market alone.

What to watch from here is whether the oil move holds or fades, and whether incoming inflation data validate the market's concern. A sustained rise in both oil and yields would suggest investors are repricing the inflation outlook rather than reacting to a single headline. For now, the two markets are sending the same signal.