In the red were painted on the last day of the week the stock board, as the completion of American President Donald Trump's visit to China did not yield any agreement on common pressure to Tehran to open the Straits.
Fear of a long-term energy crisis launched oil prices and with them the expectations of even more persistent inflation.
The cherry on cake is the uncertainty surrounding the political crisis in Britain, due to the internal party leadership crisis in the Labour Party, threatening Prime Minister Kir Starmer's attempt at budgetary discipline.
However, the fall in stock indices is not comparable to the strong sales that literally broke the bond market.
A market where pressured continuously since the start of the Middle East crisis and in recent days the odds are now beginning to reach dangerous levels, under the weight of an undisclosed solution for Hormuz.
A development that the investment community considers can lead Central Banks even to an increase in interest rates to limit inflationary pressures resulting from the energy shocks fueled by the war in Iran.
The American 10 years now have a yield of around 4.6%, the German decade around 3.17%, the French 3.966%, the United Kingdom 5.17% and Japan has a yield of over 2.7%.
«Massacre» and the long endings with Great Britain's 30-year high 28.
US 30-year-olds exceeded 5.12% , i.e. its performance has been at the highest levels since 2007, while the 30-year title performance in Japan has reached 4% for the first time since 1999.
The fact that since the start of the Ormuz crisis the yields of bonds have risen from 12%-22%, it is indicative of how different from shares «weigh» the bond markets the impact of the geopolitical crisis on the economy.
Also the fact that yields have increased more in the economies that are importers of oil, indicates how different bonds price the Ormuz crisis.
«Coal the treasure» from the US-China Summit
Trump's long-awaited meeting with Si despite the extremely warm climate between the two leaders - something that certainly has its meaning - however not It marked a joint pressure on Tehran to open Hormuz.
Instead, C had a chance to clear up with «glove» in the United States that there is a serious risk of a break in the relations of the two states if there is no proper handling of the issue of Taiwan.
The meeting of the two leaders brought neither any significant agricultural or commercial agreements that would offer not only a narrative to the US President ahead of the mid-term elections in November, but also an opportunity to de-escalate price pressure through a abolition of all tariffs.
The agreements presented by the White House did not satisfy the investment community, as they essentially include a a plan that could lead to the removal of duties on Chinese products worth around 30
Billions of dollars from non-critical industries only and a statement from China that it can buy more oil and agricultural products from the US, but without any agreement being finalized.
But investors expected a strong consent from China, as Iran's close trading partner to persuade the Iranian government to open the Straits of Hormuz. Although Trump said that Shi offered to help and it is possible that China would lobby Iran in the background, however China did not even mention Iran in its public statements. (p.: The only perhaps positive development from this front is that Beijing allegedly committed itself to not selling military equipment to Iran).
The markets also expected a more clear decision on both trade policies between the world's two largest economies, as both tariffs only cause additional price pressure.
Conclusion: Despite «hot climate» The situation in Hormuz remains fragile. Iran allows temporary selective transit only on certain Chinese ships, as Tehran continues to link the full opening of the Strait to the end of the American naval blockade in its own ports.
We are also in the process of a fragile truce on the issue of tariffs. and trade war management, with the two-day Trump and Shi summit in Beijing preventing a new escalation. However, despite the fact that a framework for controlled trade with mutual concessions was agreed, trade war remains active.
Inflation figures have begun to «pain»
The figures announced during the week showed inflation in the US climbing to 3.8% – a level we had to see since 2023 – and the Producer Price Index –PPI – jumping to 6%.
These figures are currently exhausting Fed's interest rate reduction hopes.
More specifically, the April producer price index presented on an annual basis the strongest increase since December 2022. It was climbed to 6%, against estimates for rising to 4.8% and from 4.3% of March.
The consumer price index in the US ran in April at an annual rate of 3.8% of the previous 3.3%, moving to its highest level for 3 years.
Corresponding was the image and structural inflation - it does not count the volatile energy and food prices - which ran last month at an annual rate of 2.8% accelerating from 2.6%, while analysts predicted a milder increase of 2.7%.
In this respect, structural inflation, which is considered to be a more informative measure of the forthcoming inflationary trends and therefore the central banks focus more on it, was significantly removed from Fed's target of around 2%.
Depending on the picture in Europe of annual inflation in the Eurozone rising to 3% in April 2026, recording a significant rise from 2.6% in March, according to Eurostat's most recent preliminary figures, and in Japan producer prices increased at the fastest rate since 2014.
But it is not only inflation, but also the highest deficits that will slowly come to the heart, which also discount the bond markets.
You see, governments in order to support citizens from the new inflationary wave are likely in the coming months to adopt a number of support measures, such as fuel subsidies etc. The adoption of such measures, however, increases deficits, a period when only the budgetary area «brave» It's not.
The Japanese factor
In a recent article we had explained why the Fed would rather take a waiting stance at the moment, as it has repeatedly stated that monetary policy instruments are limited to deal with supply inflation. (p.: Relative analysis can be read Here.).
One of the most important reasons, therefore, that the value of bond portfolios has decreased significantly over the last few months is not that markets are discounting interest rates, but they are discounting interest rates to remain stable.
Another equally important reason is the sales of American bonds from Japan.
In the first quarter of 2026, Japanese investors went further down their positions on American debt over the past four years.
Despite these sales, Japan remains consistently the world's largest foreign bond holder.
However, the need to support the Japanese yen is very likely to force the Japanese Ministry of Finance and the Central Bank -BOJ - to continue selling American bonds to buy yen and intercept national currency pressures. Moreover, increased oil prices are burdening Japan, which is a net importer of energy. This causes imported inflation, forcing the country to seek immediate liquidity by selling American bonds.
In addition, following the termination of the negative interest rate policy by BOJ, Japanese government bond yields have been ejected to the highest levels in recent decades This causes many Japanese institutional investors to repatriate their funds to invest in the domestic market, which often involves selling foreign assets.
Το γεγονός ότι ο μεγαλύτερος πιστωτής των ΗΠΑ μειώνει τις αγορές του και αυξάνει τις πωλήσεις του προκαλεί αλυσιδωτές αντιδράσεις.
Καταρχάς, αυξάνονται οι αποδόσεις των αμερικανικών ομολόγων γεγονός που σημαίνει υψηλότερο κόστος δανεισμού για την αμερικανική κυβέρνηση.
Όσο η BOJ αυξάνει τα επιτόκια της, οι αποδόσεις των ιαπωνικών κρατικών ομολόγων ενισχύονται. Ταυτόχρονα, η Fed εξετάζει μειώσεις επιτοκίων. Επομένως καθώς το επιτοκιακό πλεονέκτημα του δολαρίου αρχίζει να μειώνεται βρισκόμαστε μπροστά στο ξετύλιγμα ενός γιγαντιαίου carry trade που λειτουργούσε για χρόνια και βασιζόταν στον δανεισμό φθηνού γεν για την αγορά αμερικανικών περιουσιακών στοιχείων υψηλότερης απόδοσης.
Αυτό που συμβαίνει τώρα λοιπόν είναι η αντίστροφη κίνηση λόγω της αλλαγής της νομισματικής πολιτικής.
Disclaimer of Liability: This material is provided for information purposes only. Under no circumstances should it be taken as a supply, advice or encouragement for the purchase or sale of the products mentioned. Although the information contained is based on sources considered reliable, no assurance is given that they are complete or accurate and should not be taken as such.
