Investors brace for surge in inflation as crude rallies

HONG KONG

Gas prices are displayed in front of a gas station, Thursday, Sept. 10, 2026, in Carlsbad, Calif. (AP Photo)

Crude prices have soared more than 30 percent over the past week as the U.S. and Iran exchanged strikes around the Strait of Hormuz.

Brent oil almost touched $110 per barrel on Sept. 11, its highest since May.

With the war showing no sign of ending, investors are bracing for another surge in inflation that will put pressure on central banks to tighten monetary policy further.

In turn, government bond yields have jumped again this week to levels last seen during the global financial crisis. The 30-year Treasury yield reached 5.36 percent, a new post-2007 peak.

The 10-years are close to five percent and nearly at a 19-year high.

The European Central Bank on Sept. 10 lifted rates and warned of an extended period of rising prices, and eyes are now on the Federal Reserve's policy meeting next week.

Investors see a more than 70 percent chance that officials will opt for a quarter-point lift.

"Attacks on shipping are now feeding directly into oil, natural gas and diesel prices," said Quintex Intel's Stephen Innes.

"Temporary inflation, temporary supply shocks, temporary geopolitical premiums. Markets are generous with temporary problems because they can look through them, but what they hate is when temporary begins overstaying its visa, and oil is starting to do exactly that,” he said.