Global bond sell-off deepens amid fears US economy may be running too hot – business live

AI desk brief

Global bond sell-off is deepening as stronger US PMI data, higher oil prices and a weak five-year Treasury auction pushed 10-year Treasury yields above 5% and driven five-year yields over 5% for the first time since 2007. Fed funds futures now price a 71% chance of a rate hike at the October meeting and a 55% chance of policy being 50bp higher by end-December, reinforcing a higher-yield backdrop that is typically bearish for gold and other precious metals.

The macro impulse is clearly inflationary: US business activity is expanding at the fastest pace in five years, new orders are at the strongest since April 2022 and input costs remain elevated due to energy prices and supply-chain pressures. The key risk for metals is further upside in real yields if the Fed is forced into additional tightening.