📈 Global Bonds Buckle as Oil Price Surge Triggers Inflation & Rate Hike Fears

Global markets face selling pressure as soaring energy costs and Middle East conflicts reignite global inflation risks, threatening energy-importing economies and trade routes crucial to Sri Lanka's supply chain. • Macroeconomic Impact & Oil Shock • Brent crude spiked nearly 13% weekly to $ 109.97/bbl, driven by Red Sea/Strait of Hormuz disruptions and escalated U.S.-Iran conflict. • Analysts warn oil could reach $ 121.99/bbl, posing severe downside risks to fuel import costs, trade balances, and national energy budgets. • Global Bond Yield & Rate Outlook • U.S. 10-year Treasury yield hit a 3-year high of 4.97%, while 30-year yields reached 5.38%. • Markets now price in a ~70% probability of a U.S. Fed interest rate hike this month. • Analysts project 8 out of 9 developed-market central banks will tighten policy by year-end, which could tighten global liquidity and pressure emerging market currencies. • Global Equity & Foreign Demand Slide • MSCI Asia-Pacific (ex-Japan) fell 1.8%, Japan’s Nikkei lost 2.8%, and Hong Kong’s Hang Seng dropped 1.5%. • High global interest rates and elevated discount rates present headwinds for foreign demand across core foreign exchange earning sectors like apparel & textiles and tea exports. _Note: Summary compiled from provisional global market data as of September 2026._