Donald Trump said he had rejected the Iranian offer of a seven-day truce. (AFP Photo)
Oil prices spiked on Sept. 28 as U.S. Presidents Donald Trump's rejection of an Iranian offer of a seven-day truce stoked inflation concerns.
Oil prices, which fell more than two percent on Sept. 25 on news of the offer, bounced back at the start of the new week, with Brent back above $106 a barrel.
That stoked inflation concerns again, and also weighed on stock markets.
Bond yields climbed, with the average on a gauge of world bonds topping 4 percent last week for the first time since 2007, according to Bloomberg.
The rise in prices puts the focus back on the Federal Reserve ahead of its next policy meeting at the end of October, with CME's FedWatch tool putting the chances of a second successive interest rate hike at more than 65 percent.
Before that decision is made, investors will see the release of the bank's preferred gauge of inflation this week as well as a key jobs report that could play a vital role in policymakers' thinking.
"Middle East tensions have flared again after President Donald Trump rejected Iran's latest proposal to reopen the Strait of Hormuz," wrote Stephen Innes at Quintex Intel.
"Oil has pushed higher, Asian equities are softer, and suddenly the brief Friday [Sept. 25] reprieve in global fixed income looks more like an intermission than the end of the show."
Still, he added: "The market is still pricing some probability that everyone eventually finds their way back to the table, even if they continue to spend the next few weeks shouting across it first."
