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European natural gas prices have reached a three-year high, and US 10-year borrowing costs have followed, touching levels last seen in 2023. The energy move looks like a commodity story.
What complicates it is Iran: rising fears of a return to full-scale conflict are working through the bond market alongside the gas surge, and the two drivers are not easy to separate.
The case for treating this as more than a temporary dislocation starts with the chain of transmission. Energy prices feed into headline inflation, and headline inflation feeds into the longer end of the rate curve.
A European gas print at a three-year high is not the kind of signal that bond traders can dismiss as seasonal noise.
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