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LONDON/SYDNEY — Government bonds steadied on Wednesday after a steep selloff that sent yields to multi-year highs on war-driven inflation fears, a calmer backdrop which helped stocks rise ahead of closely watched results from Nvidia.

Investors are bracing for higher energy prices—driven by the effective closure of the Strait of Hormuz—to feed into broader inflation and force central banks to raise interest rates.

Brent crude futures slipped about 2% to $109.14 a barrel after US President Donald Trump again said the war with Iran would end “very quickly.” Still, investors remained cautious over the outcome of peace talks as disruptions to Middle Eastern supply continued.

The US 30-year Treasury yield climbed to 5.20% overnight, a level last seen in 2007, while the benchmark 10-year US yield hit a 16-month high of 4.687%.

Both gave back a few basis points on Wednesday, however, to 5.17% and 4.65% respectively, but remained at levels that threatened pain for other asset classes, especially with no immediate reasons for relief in sight.

Mohit Kumar, chief European economist at Jefferies, said they had advised clients to avoid longer-dated bonds.

“Even if we stay in this ‘No War No Peace’ scenario for an extended period, it would have a negative impact on oil prices and inflation. We should also see government support for fuel subsidies and an increase in unemployment benefits as the oil shock reduces economic activity,” he said.

“Higher rates should also start feeding into risky assets,” he added, which typically refers to stocks and other asset classes such as corporate credit.

There were tentative signs of easing pressure from the Gulf on Wednesday, as two Chinese oil tankers exited the Strait of Hormuz, shipping data showed, following positive comments from the US president and his deputy.

In Beijing, less than a week after Trump’s high-profile visit, Chinese leader Xi Jinping held talks with Russian President Vladimir Putin, saying it was imperative to stop the war in the Middle East.

Longer-dated bonds have also sold off in Europe and Japan, but, as with Treasuries, they found some relief on Wednesday.

Germany’s 10-year yield, the euro zone benchmark, fell 3 basis points from Tuesday’s 15-year high to 3.16%, offering some support to European shares, which were up 0.4%.

US S&P 500 futures were 0.3% higher, having fallen on Tuesday.

Big day for chipmakers

Nvidia is due to report first-quarter earnings after the US market close. Expectations remain high, with revenue forecast to jump nearly 80% to about $79 billion, according to the median estimate in an LSEG survey of analysts.

The global backdrop is more complex. A Samsung Electronics union said it would go ahead with an 18-day strike from Thursday, threatening semiconductor supply.

Samsung shares fell as much as 4.4% before closing broadly flat. They remain up 130% this year, one of the standout performers in a massive rally in global chip stocks that has supported wider equity markets.

“It remains my base case that we are seeing a corrective pullback after an absolutely phenomenal rally,” said IG analyst Tony Sycamore. “The US yields obviously are creating some rumbles in the market and now attracting a lot of attention.

“Nvidia could come out and absolutely exceed expectations … but I don’t think so. I think the ability for Nvidia to just absolutely shoot the lights out and shock everybody like it has done, I don’t think that’s in its book of tricks anymore.”

Other chip stocks were doing well ahead of the results, rising in US premarket trading, as well as in Europe and China, where the country’s top flash memory chip maker marked the official start of its onshore listing process.

In currency markets, the dollar hovered near a six-week high against a basket of major peers. It was steady at 159.02 yen, $1.1502 per euro and $1.340 to the pound.

Sterling barely reacted to cooler-than-expected British inflation data, though traders pared back bets on imminent Bank of England rate hikes, sending two-year gilt yields down 10 basis points.

Spot gold was a fraction higher at $4,496 per ounce, but still close to a near a six-week low.

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Strait of Hormuz

The Strait of Hormuz is a strategically vital waterway connecting the Persian Gulf to the Gulf of Oman, serving as a chokepoint for roughly 20% of the world’s oil transit. Historically, it has been a key route for trade and conflict for centuries, with its name derived from the ancient port city of Hormuz. Today, its geopolitical importance frequently makes it a focal point for tensions between Iran, Arab states, and global powers.

Middle East

The Middle East is a historically and culturally rich region spanning Western Asia and parts of North Africa, often considered the cradle of civilization. It was home to ancient empires like Mesopotamia, Persia, and Egypt, and later became the birthplace of major religions including Judaism, Christianity, and Islam. Today, it remains a diverse area with a complex modern history shaped by oil discovery, colonial legacies, and ongoing geopolitical conflicts.

Beijing

Beijing, the capital of China, is a city rich in history spanning over three millennia, serving as the nation’s political and cultural center for centuries. It is home to iconic landmarks such as the Forbidden City, the imperial palace from the Ming to Qing dynasties, and the Great Wall of China, which winds through its northern outskirts. Today, Beijing blends its ancient heritage with modernity, hosting the 2008 Summer Olympics and continuing as a global hub for innovation and diplomacy.

Germany

Germany is a Central European country with a rich and complex history, from its origins as a collection of Germanic tribes and the Holy Roman Empire to its unification in 1871. It played a central role in both World Wars and was divided into East and West during the Cold War until reunification in 1990. Today, Germany is known for its cultural heritage, including landmarks like the Brandenburg Gate and Neuschwanstein Castle, as well as its contributions to philosophy, music, and science.

Europe

Europe is a continent with a rich and complex history, serving as the birthplace of Western civilization through ancient Greece and Rome. It experienced transformative periods like the Renaissance, the Reformation, and the Industrial Revolution, which shaped modern science, art, and politics. Today, Europe is known for its diverse cultures, historic landmarks, and the European Union, which fosters cooperation among many of its nations.

Japan

Japan is an island nation in East Asia with a rich history dating back thousands of years, from ancient imperial dynasties and samurai culture to its rapid modernization during the Meiji Restoration. Its cultural sites, such as Kyoto’s historic temples and Hiroshima’s Peace Memorial, reflect a blend of Shinto and Buddhist traditions, as well as resilience after World War II. Today, Japan is known for its unique fusion of traditional arts, like tea ceremonies and kabuki, with cutting-edge technology and pop culture.

China

China is an ancient civilization with over 5,000 years of continuous history, known for its rich cultural heritage and major historical contributions such as the Four Great Inventions (papermaking, printing, gunpowder, and the compass). It was home to imperial dynasties like the Qin, Tang, and Ming, which built iconic landmarks such as the Great Wall and the Forbidden City. Today, China is a global power blending its historical traditions with rapid modernization.

Gulf

The Gulf, often referring to the Persian Gulf, is a vital body of water in Western Asia, bordered by countries such as Iran, Iraq, Saudi Arabia, and the United Arab Emirates. Historically, it has been a crucial trade route for millennia, linking ancient civilizations like Mesopotamia with the Indus Valley, and later became central to the global oil industry after the discovery of petroleum in the early 20th century. Today, the Gulf region is known for its cultural heritage, economic significance, and geopolitical importance.