Bonds, stocks, silver fall amid inflation fears, Trump China visit

Government bonds, precious metals and international stocks sold off on Friday, as inflation fears mounted and U.S. President Donald Trump concluded his high stakes visit to China.

By 10:56 a.m. in London, yields on a swathe of global sovereign bonds had jumped. The yield on the U.S. 10-year Treasury was almost 9 basis points higher at 4.544%, its highest level in almost a year.

The U.K. — which has seen yields on its government-issued debt surge in recent days amid mounting political uncertainty — saw its benchmark 10-year gilt yield 15 basis points higher.

Japan, which is particularly sensitive to inflationary pressure linked to the Iran war, given its status as a major energy importer, also saw bond yields rise drastically. Friday saw the yield on Japan’s 2-year bond rise by as much as 19 basis points, before cooling a little to trade 12 basis points higher.

Bond yields and prices move in opposite directions.

At the same time, stocks listed in Asia and Europe traded sharply lower, and U.S. equity futures pointed to a negative open on Wall Street. It comes after the Dow Jones Industrial Average reclaimed the 50,000 threshold on Thursday and the S&P 500 closed above 7,500 for the first time.

Gold and silver markets also came under pressure on Friday.

Spot gold fell 2% to $4,552.59 an ounce, while spot silver was down 6.5% to $78.08 per ounce. Front-month gold and silver futures fell 2.6% and 7.7%, respectively, while U.S.-listed gold and silver miners and ETFs sold off in pre-market trading.

By 5:05 a.m. ET, the ProShares Ultra Silver ETF was down more than 12%, while the iShares Silver Trust fund was 6% lower. Silvercorp Metals lost 6.9% ahead of the regular trading session, Teck Resources fell by 5.9% and Endeavour Silver was 4.9% lower.

The U.S. dollar index rose by around 0.4%, as the greenback got a boost from a resurgence in inflation concerns, and oil prices jumped after Trump said China had agreed to buy American oil.

Various developments are weighing on sentiment, investors and analysts watchers told CNBC on Friday.

Renewed concerns about an energy shock translating into more hawkish monetary policy is hitting Treasurys, amid fears the Federal Reserve may be behind the curve on inflation under incoming chair Kevin Warsh. There is also continued uncertainty around the U.S.-Iran war, and the lack of a meaningful announcement resulting from the three-day Trump-Xi summit — despite an apparent thawing of Sino-U.S. relations. Political upheaval in the U.K. is also playing a part, analysts said.