US Treasury yields rose on Friday as investors recalibrated inflation expectations amid a sharp spike in oil prices and escalating global trade tensions.
The greenback found support from the higher yield environment, hovering near a 40-year peak against the Japanese yen as risk-off sentiment spread across currency markets.
The repricing reflects growing concerns that supply chain disruptions from the Middle East conflict, combined with a renewed trade war, could sustain elevated energy costs for longer than previously anticipated.
Sterling lagged behind major peers, reflecting broader pressure on risk assets as the inflation outlook darkened.
This development follows a week of sustained dollar strength, driven by fears that military escalation in the Middle East would disrupt energy supplies and tighten financial conditions globally.
The current move underscores how geopolitical risk is increasingly translating into direct inflationary pressure, complicating the path for central banks.