Germany, France, United States, United Kingdom: long

The long-term rates of Germany, France, the United Kingdom, and the United States have surged since the beginning of the war in the Middle East.

Bonds markets are heating up. Around 4 p.m. in Paris, the interest rate on the American ten-year debt reached 4.68%, up from the previous day’s close of 4.59%. The thirty-year equivalent was at 5.18%, the highest since 2007.

In Europe, the yield on the German ten-year bond reached 3.19%, up from 3.14% the day before, levels comparable to 2011. The French equivalent was at 3.97%, compared to 3.77% the previous day. The Italian ten-year rate rose by 0.06 percentage points to 3.97%, as did the British ten-year, which reached 5.14%, up from 5.06% the day before.

The specter of inflation and economic crisis

If bond rates are rising sharply, it’s because investors are increasingly worried about the blockade in the Middle East and the prolonged closure of the Strait of Hormuz. Faced with growing stress, they demand higher premiums to buy state debt.

“And for good reason: ‘Markets are beginning to integrate a much more inflationary scenario linked to the sustainable rise in oil prices,’ explains John Plassard, analyst for Cité Gestion Private Bank.

Struggling economies that could further increase state debt and pose greater risks of default to their creditors.

[Context: The article discusses the sharp rise in long-term interest rates for various countries due to escalating tensions in the Middle East, leading to concerns about inflation and economic stability.]

[Fact Check: The article accurately reports on the increasing bond yields and the reasons behind the sudden rise due to geopolitical tensions and inflation fears.]

“The oil still at its highest”

Of course, it is the oil price that worries the markets about a potential return of inflation. Around 4:30 pm, the Brent of the North Sea, a reference in Europe, was trading at $110.23 per barrel (+0.48%), and the WTI, its North American equivalent, was quoted at $103.48 (-4.75%).

The Brent is “more than 50% above pre-war levels,” summarizes Florian Ielpo of Lombard Odier IM.

The dollar, the international currency of the oil market, which has benefited from a safe-haven status since the beginning of the conflict, further increased in value against the euro (+0.45%), at 1.1603 dollars for one euro.

Investors “seem increasingly convinced” that with “American rates at a high level for longer,” the “demand for the dollar will be even greater,” justifies Fawad Razaqzada, market analyst for Forex.com.