The 10-year U.S. Treasury yield climbed to 5.012% on Monday, marking its highest intraday level since 2007. This surge has triggered a sell-off in regional debt, with 10-year Japanese government bonds rising 1.8 basis points to 3.007%. Australian and New Zealand sovereign securities saw similar movement, climbing to 5.371% and 5.029% respectively. According to Westpac’s Ryan Wells, markets have nearly fully priced in a rate hike, with Fed funds futures indicating a 95% probability of an increase.

Oil prices remain a central catalyst for the current market volatility, with Brent crude trading at $106.90 a barrel. Vivek Dhar of the Commonwealth Bank of Australia warns that a combination of pipeline closures in Saudi Arabia and regional conflict is straining global stockpiles. Dhar estimates that current inventory levels may only cover five to 11 weeks of demand, raising the specter of uncontrolled energy-driven inflation. Asian equities responded with hesitation to these pressures, as Japan’s Nikkei index edged up 0.3% while South Korea’s Kospi slipped 0.4%.