The week's dominant thread: an oil-driven inflation shock is rewriting the rates playbook, and bond markets are repricing fast.
Researchers flagged that the Strait of Hormuz disruption tied to the Iran conflict has pushed Brent near $110 and WTI above $105, with prediction-market odds of a near-term reopening collapsing from 61% to 28%. April US data landed hot across the board — headline CPI at 3.8%, PPI up 1.4% month-on-month, import prices climbing despite tariffs that analysts argued are now being absorbed by US consumers rather than foreign exporters.
The rates response was striking. The 30-year Treasury auctioned above 5% for the first time since 2007, gilts hit 2008-era highs on UK political wobbles, and bunds and JGBs joined the move. Several analysts noted markets have now priced out Fed cuts for the rest of the year, even as the Fed is described as still leaning dovish.
A recurring concern: the 60/40 is broken while stock-bond correlation stays positive, and real yields near 2.7% are being framed as a genuine challenger to equities. One thread also tracked US efforts to reroute oil flows around Gulf chokepoints.