Yields soar on global inflation worries. Treasury yields surged today as concerns surrounding oil-driven inflation risks from the Iran war triggered a global bond selloff. The 2-year yield ultimately closed 5 bps higher at 4.07% (up 18 bps on the week), while the 10-year yield closed 11 bps higher at 4.59% (up 24 bps on the week). Treasury yields are now at their highest levels since February 2025. Meanwhile, equities saw their worst day since March, with the S&P 500 and NASDAQ sliding 1.24% and 1.54%, respectively.
G-7 finance leaders to discuss global bond selloff. G-7 finance chiefs are expected to meet regarding the recent global government bond selloff, driven by elevated energy costs due to the Iran war. Japanese Finance Minister Satsuki Katayama said that they plan to discuss during a gathering next week in Paris, kicking off on May 18. Katayama’s comments come as Japan’s 30-year yield hit 4% for the first time ever, and the 20-year and 40-year reached the highest levels seen in decades. Meanwhile, US Treasury Secretary Scott Bessent sees the recent selloff as temporary, saying, “There’s been a global backup in bond yields as markets are pricing in, perhaps, inflation – a short term blip in inflation – that I believe is transient.” Despite the meeting, markets do not anticipate the G-7 to coordinate a remedy.
Trump-Xi summit ends without major agreements but progress made. This week’s Trump-Xi meeting appears to have yielded mixed results, as the former declared that “a lot of different problems” were solved while the Chinese foreign ministry described the two-day talks as having produced “substantial outcomes”, though agreements have yet to be finalized. Trump said he would consider lifting sanctions on Chinese companies that purchase Iranian oil and added that both he and President Xi agree Tehran should not possess nuclear weapons. Chinese Foreign Minister Wang described progress on trade and economic issues, while Trump said that US arms sales to Taiwan were discussed “in great detail.” Meanwhile, President Xi is now expected to visit the US this fall.