Oil prices jumped in early Asia trading on renewed Iran-linked tensions at the Strait of Hormuz, stoking fears of supply disruption and lifting inflation expectations. U.S. equity futures fell in response, with the Nasdaq down 0.5 percent and the S&P 500 off 0.2 percent, while the Russell 2000 lost 1.4 percent.
Federal Reserve Chair Kevin Warsh's hawkish remarks reinforced market expectations for a rate hike at the next Federal Open Market Committee meeting. The combination of commodity-driven inflation pressure and tighter monetary policy pushed Treasury yields higher, particularly at the front end of the curve, and increased duration risk for longer-dated bonds.
The dollar extended gains on both the geopolitical safe-haven demand and the prospect of higher U.S. interest rates.
