Brent nears $110 as inflation data fuels rate hike bets

Asian stocks closed lower on Friday. Brent crude oil nearly reached $110 per barrel. This is the highest level since May. US West Texas Intermediate crude also hit a peak above $104. The surge follows US and Iranian strikes near the Strait of Hormuz.

Yemen's Houthis attacked Saudi energy targets. They seized control of the Mocha port on Thursday. These actions threaten key global energy routes. Crude prices have risen more than 30 percent in the past week. Investors fear a prolonged supply disruption.

Bond yields reach post-crisis peaks

The 30-year US Treasury yield reached 5.36 percent. This is a new peak since 2007. The 10-year yield is close to 5 percent. This level has not been seen in 19 years. A $6 billion government buyback failed to calm the market.

The European Central Bank raised rates on Thursday. It warned of extended price increases. The US producer price index accelerated to 5.4 percent in August. This was higher than the 4.8 percent seen in July. Energy costs drove the increase.

Fed rate hike probability exceeds 70 percent

CME Group data shows a high chance of a quarter-point hike. The Federal Reserve meets next week. US consumer price index data released Friday was strong. This supports the case for tighter monetary policy. Analysts expect rates to stay high or rise further.

Global risk assets face continued pressure

Wall Street indexes ended deep in the red. European markets also fell. Asian equities followed the decline. Risk assets are under strain from oil prices and rate expectations. The conflict in the Middle East shows no sign of ending.

GN markets/inflation (en-US) reports that cost pressures are rising. These pressures may feed into consumer prices. Central banks face pressure to act. The combination of war and inflation creates a challenging environment. Market volatility is expected to persist.