Oil prices return to $100, sparking inflation concerns; global bonds see zero growth in 2026

SnapshotLaborer · 2026-03-12T08:23:04+00:00

Rising oil prices trigger a sell-off in the global fixed income markets, with the Bloomberg Global Aggregate Index's year-to-date gains fully wiped out. Although geopolitical conflicts typically boost safe-haven buying, the current inflationary pressures are strong, causing U.S. Treasury yields to climb to multi-month highs and market risk-averse sentiment to deteriorate.

SnapshotLaborer

2026-03-12 08:23:04

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Oil prices surge, reigniting inflation fears, leading to a sell-off sweeping across global fixed income markets, with worldwide bond gains fully erased this year.

On March 12, Bloomberg data showed that the Bloomberg Global Aggregate Index, which tracks the total returns of global investment-grade government and corporate bonds, has fallen to zero, with its year-to-date gains completely wiped out.

The sell-off intensified further on Thursday, primarily driven by oil prices once again surpassing the $100 per barrel mark. The index had previously risen by 2.1% on February 27 (the eve of the US-Iran conflict outbreak), but within just two weeks, all gains were lost, highlighting how geopolitical shocks can sharply reverse market sentiment.

Inflation anxiety overrides safe-haven attributes, US Treasury yields hit multi-month highs

As markets digest the escalating conflict risks, US Treasury yields have risen to multi-month highs this week.

Most fund managers believe that the current inflation pressures have overshadowed the traditional safe-haven inflows triggered by geopolitical turmoil. Typically, geopolitical instability prompts funds to flow into sovereign bonds for safety, pushing yields lower. However, in this cycle, market vigilance over inflation has taken precedence, significantly diminishing the safe-haven appeal of government bonds.

Analysis indicates that although the market generally expects the Federal Reserve to hold steady next week, if inflationary pressures continue to rise—even if signs of a slowdown in the labor market appear—the threshold for policymakers to restart rate cuts in the coming months will also increase.

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