Oil hits $100 and drives global bond sell-off
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What are the top headlines and why does the host mention taking time off?
Hey guys, before we get into today's show, I wanted to give you a heads up that I'm taking some time off. You'll be in the more than capable hands of Victoria and Sonia, and I'll be back in the fall. So in the meantime, enjoy the rest of your summer. Good morning from the Financial Times. Today is Friday, July 24th, and this is your FT News Briefing. Donald Trump's tariffs are back. And as the U.S.-Iran war continues, bond investors are not happy.
Markets have kind of recovered. And then all of a sudden, it seems like we're mired back in the fight again. So I think that investors are very keen for this to be over.
Plus, the protests in India are getting Prime Minister Modi's attention. I'm Mark Filippino, and here's the news you need to start your day.
The Trump administration is hitting 60 countries with new tariffs of between 10 and 12.5%. They'll go into effect today when the current 10% global duties expire. Previous levies issued by the president during his so-called Liberation Day were struck down by the U.S. Supreme Court earlier this year. The latest tariffs use a different legal justification. They're based on the outcome of an investigation by the U.S. Trade Representative's Office into forced labor. The probe scrutinized countries including big U.S. trading partners such as Japan, South Korea, and Canada. The U.K. and the EU also made the list. The duties are expected to include exemptions for oil, gas, and fertilizer. It may also offer carve-outs for goods that are already hit by separate national security tariffs.
Oil prices hit $100 a barrel yesterday for the first time since May. The surge came after the Houthi militants in Yemen, who are backed by Iran, hit two Saudi Arabian tankers in the Red Sea. Those attacks raised fears that the Houthis could shut down the Bab el-Mandab Strait, which has become a vital route for oil since the Strait of Hormuz has been effectively shut down. As a result of oil prices surging, a global bond sell-off has gotten worse. Here to discuss is the FT's U.S. Markets Editor, Kate Duguid. Hi, Kate. Hi. How bad was yesterday's bond sell-off?
So yesterday, U.S. Treasury yields, which move inversely to price, yields rose to their highest level in 18 months, which means that prices were at their lowest levels in 18 months. In Germany, yields were at their highest level since 2011. We also saw bonds in France reaching their highest level since 2009. So things were moving quite a lot yesterday.
Yeah. Give me a sense of how investors are feeling.
So I think our sense is that investors kind of would like to move on, but that this keeps cropping up. I think that there have been a number of cycles now where investors have believed that there's a resolution around the corner. Markets have kind of recovered. Inflation expectations have fallen. Stocks have gone up. And then all of a sudden, it seems like we're mired back in the fight again. So I think that investors are very keen for this to be over. That said, it does seem like people are becoming a little bit more skeptical. Every time we have a new promise of resolution and it doesn't work out, I think that the governments involved lose a little bit of credibility with investors. So I think that there's a huge, huge, huge amount of uncertainty as to what happens next.
Now, Kate, $100 a barrel for Brent Crude is kind of the threshold where I think investors allow themselves to panic, but it's still shy of the high mark that we've hit this year, the $126 a barrel that we saw back in May. Is that of any comfort to investors?
Yeah, it's not back at those levels yet. But the rebound this month from where it had been has been pretty blistering. I think the pace of the rally has been maybe of more concern than the actual outright levels. Goldman Sachs has said that they think that if the closure continues, that oil could rise to $120.
Which new US tariffs were announced and which countries and goods are affected?
They said that earlier this week. It does seem like at this rate, we will see a continued rally in oil prices if things remain shut down in the way that they are.
Yeah.
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Chapters
4 chapters
1
What are the top headlines and why does the host mention taking time off?
0:00–4:11
2
Which new US tariffs were announced and which countries and goods are affected?
4:11–8:54
3
Why did oil jump above $100 and what triggered the spike in the Red Sea?
8:54–10:57
4
How has the oil surge led to a global bond sell-off and what moves did yields make?
10:57–12:57