La Jornada: Bond interest rates escalate due to inflationary pressures

Global price shocks, resulting from the closure of the Strait of Hormuz, have led investors to demand higher interest rates to compensate for the risk of more persistent inflation.

Only the 10-year US bond closed on Friday at a rate of 4.59 percent, which represented a maximum since January 2025. The 30-year bond closed at 5.13 percent, the highest since mid-2007.

Meanwhile, the required yield on Germany’s 10-year bond was 3.185 percent, the highest since 2011; while Japan’s, reaching 2,718 percent, closed last week at its highest level since 1997, according to data from Jacobo Rodríguez, an analyst at Roga Capital.

“Investors, in some way, were disappointed that no common agreements were announced between China and the United States to seek to end the conflict in the Middle East last week; this led to thinking that the conflict will extend, so inflationary expectations rose,” Rodríguez explained.

In addition, higher debt interests increase the cost of financing for companies and governments.

For its part, the dollar reversed two consecutive weekly declines, registering gains in all sessions. In fact, the dollar index (DXY), which measures the performance of the US currency against a basket of six international currencies, recorded its best weekly performance in more than a month, supported by another set of resilient data from the United States and inflation figures that turned out much higher than expected in April.

Retail sales, initial weekly jobless claims, industrial production and manufacturing output reinforced the idea that the US economy is not slowing fast enough to give the Federal Reserve much room to relax, analysts said.

Given the high rates of the Consumer Price Index (CPI) and the Producer Price Index (PPI), the Federal Reserve showed growing concern about persistent inflation in services, energy shocks, supply chain disruptions and the risk that inflation expectations will become unanchored.