On Wednesday, September 2nd, the international energy market once again became a core variable in global asset pricing. As the conflict between the US and Iran escalated again, concerns about the stability of the energy supply chain rose rapidly, leading to higher international crude oil prices and European natural gas prices reaching their highest level since 2023. Latest market data shows that Brent crude oil briefly touched around $97, and European TTF natural gas prices broke through €75 per megawatt-hour, with energy price volatility again impacting the bond and stock markets. Simultaneously, the yield on 10-year US Treasury bonds rose to around 4.81%, and yields on major European bonds also increased, as the market reassessed the impact of high energy costs on inflation and economic growth.

Energy market repricing: Crude oil and natural gas become the core of risk transmission.

The biggest recent change in the energy market is not simply due to rising commodity prices, but rather the market's re-incorporation of supply chain risk premiums. Brent crude oil prices rose rapidly, reaching a high of nearly $97 before retreating to around $95. The European natural gas market was even more sensitive, with Dutch TTF natural gas prices breaking through €75/MWh, a new high since 2023. Behind these energy price changes lies a reassessment of the security of key transportation routes. The crude oil market has global liquidity, and any factor that could affect supply stability could lead to a short-term expansion of risk premiums. The natural gas market is affected by regional inventories, import sources, and seasonal demand, making the European market more sensitive to supply disruptions. From a financial market perspective, rising energy prices are not just a commodity market event, but also affect interest rate assets through inflation expectations. When energy costs rise, business production, transportation, and household consumption costs may be affected, and the market will reassess the future inflation path, which is one of the important reasons for the recent adjustments in the bond market.

Inflationary pressures reappear: Central bank's policy space faces new and complex factors.

The biggest impact of rising energy prices on the macroeconomy lies in its potential to alter market expectations regarding the duration of inflation. Data shows that the Eurozone's inflation rate rose to 3.3% in August, with energy prices increasing by 14.3% year-on-year, making energy a significant driver of price changes once again. For major central banks, there is a clear distinction between energy-driven inflation and demand-driven inflation. The former typically stems from supply-side changes, and if its duration is short, monetary policy may focus more on economic growth; however, if energy prices remain high for an extended period, inflation expectations may experience a secondary transmission, complicating the policy environment. Major central banks such as the Federal Reserve, the European Central Bank, the Bank of England, and the Bank of Japan need to consider both price stability and changes in economic activity when formulating policies. The current market focus has shifted from a single interest rate path to the interrelationship between energy prices, inflation expectations, and financial conditions. This means traders need to pay attention to the interactions between macroeconomic variables, rather than solely observing changes in individual asset prices. Rising energy prices not only affect commodity markets but also alter bond yields, corporate financing costs, and the valuation system of risky assets.

Bond market under pressure: High-yield environment again impacts risk asset valuations

Following the rise in energy prices, the global bond market experienced significant volatility. The yield on 10-year US Treasury bonds rose to around 4.81%, German 10-year bonds to 3.37%, and UK 10-year bonds to 5.26%, all at relatively high levels in recent years. Rising bond yields indicate a market demand for higher risk compensation, which affects the valuation logic of risky assets such as stocks. Especially in a high-valuation environment, the impact of interest rate changes on sectors sensitive to long-term cash flow is more pronounced. From a market structure perspective, current influencing factors have expanded from corporate earnings expectations to the repricing of macroeconomic risks. The interconnectedness of energy prices, interest rate levels, and geopolitical risks has further complicated the sources of asset price volatility.

Market focus shifts: energy supply, inflation expectations, and global capital flows

The market is currently repricing around three core issues. First, will energy supply risks continue to impact the price system? The crude oil market is focused on supply chain stability, while the natural gas market is concerned about European inventory replenishment and import capacity. Whether energy prices remain highly volatile will influence predictions of future inflation paths. Second, will changes in inflation alter the pace of central bank policy? If rising energy prices lead to renewed inflationary pressures, market expectations for the future interest rate environment may continue to adjust. Third, will global capital flows change? In an environment of rising bond yields, investors typically reassess the attractiveness of risky assets, potentially impacting market volatility.