Falling Oil Prices Haven’t Reversed the Shift to Higher Bond Yields

ING argues that while easing tensions around the Strait of Hormuz have pushed oil prices lower, bond markets are unlikely to return to pre-conflict conditions as inflation and real yields remain structurally elevated.

• U.S. inflation breakevens have largely normalized, but real yields remain significantly above pre-conflict levels, keeping Treasury yields anchored higher.
• The ECB’s recent rate hike and continued hawkish rhetoric suggest markets may be underestimating the persistence of inflationary pressures in Europe.
• ING expects continued volatility in energy markets as depleted oil reserves are replenished and geopolitical risks remain present despite diplomatic progress.

Explore the full analysis for a deeper examination of bond-market dynamics, inflation expectations, and the outlook for global rates.