Global Markets Reel: Inflation, War Drive Yields Higher

Hawkish comments from the BOE, ECB, and BOJ pushed global bond yields higher, with the 10-year German Bund yield reaching a 2.25-year high of 3.01%, the 10-year T-note yield a 6.75-month high of 4.32%, and the 10-year UK Gilt yield a 14-month high of 4.91%. European natural gas prices surged over 12% to a 3-year high after Qatar reported extensive damage to its Ras Laffan LNG export plant, with Reuters stating 17% of capacity is damaged and will take three to five years to repair.

Stronger-than-expected US jobless claims and the Philadelphia Fed business outlook survey further accelerated stock losses and bond yield increases, though T-note yields pulled back slightly after weaker Jan new home sales. Crude oil prices remain elevated despite the IEA releasing 400 million barrels from emergency stockpiles, as the Iran war disrupts 7.5% of global oil supply and threatens the Strait of Hormuz, with Goldman Sachs warning prices could exceed $150 a barrel.

Central banks are maintaining hawkish stances, with the ECB cutting its 2026 Eurozone GDP forecast to 0.9% from 1.2% and raising its 2026 inflation forecast ex-food and energy to 2.3% from 2.2%. The BOE kept rates at 3.75% and stated readiness to act against inflation.

The Magnificent Seven tech stocks, mining stocks, and materials stocks are broadly weaker, while US natural gas producers like Cheniere Energy surged over 10% on the Qatar plant damage. Accenture and Five Below reported strong earnings, and Rivian Automotive gained on Uber's investment news.