--- title: "The US bond market sounds the alarm! PPI exceeds expectations combined with rising oil prices, inflation concerns rapidly intensify" type: "News" locale: "zh-CN" url: "https://longbridge.com/zh-CN/news/279681614.md" description: "The U.S. bond market has issued warning signals as PPI rose more than expected and oil prices climbed, intensifying concerns about stagflation. In February, PPI increased by 0.7% month-on-month, marking the largest rise in seven months, while core PPI rose by 0.5%. The market reacted with a sell-off of government bonds, leading to an increase in short-term interest rates and a decline in the stock market of over 1%. The Federal Reserve maintained interest rates, acknowledging the uncertainty brought by the situation in the Middle East, but does not believe the current economy is in a state of stagflation. Concerns about stagflation risks continue to escalate" datetime: "2026-03-18T22:27:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279681614.md) - [en](https://longbridge.com/en/news/279681614.md) - [zh-HK](https://longbridge.com/zh-HK/news/279681614.md) --- > 支持的语言: [English](https://longbridge.com/en/news/279681614.md) | [繁體中文](https://longbridge.com/zh-HK/news/279681614.md) # The US bond market sounds the alarm! PPI exceeds expectations combined with rising oil prices, inflation concerns rapidly intensify U.S. inflation pressures are rising again, compounded by conflicts in the Middle East pushing up energy prices. The bond market issued warning signals on Wednesday, with concerns about stagflation risks significantly increasing. Stagflation refers to the situation where inflation rises alongside slowing economic growth, a combination that often exerts multiple pressures on corporate profits, stock and bond performance, and monetary policy space, and is considered one of the macro scenarios that investors least want to see. According to data released that day, the U.S. Producer Price Index (PPI) rose for the third consecutive month in February, further exacerbating market worries. The overall PPI increased by 0.7% month-on-month, marking the largest increase in seven months, while the core PPI rose by 0.5%, indicating that upstream price pressures are building. Following the data release, U.S. Treasuries faced selling pressure, with short-term rates rising sharply; the yield on the 2-year Treasury note increased by 7.2 basis points to 3.74%, nearing the highs since August of last year, while the stock market saw significant declines, with the Dow Jones, S&P 500, and Nasdaq all recording drops of over 1%. The adjustment in the bond market had already begun to show signs before the data was released. Influenced by the situation in the Middle East, international oil prices continued to climb, with Brent crude briefly surpassing $109 per barrel. Previously, the U.S. and Israel had launched airstrikes on key Iranian natural gas facilities, raising market concerns about energy supply disruptions and increasing the risk of inflation rebounding. With the PPI data exceeding expectations, the selling in the bond market intensified. In this context, the Federal Reserve announced the same day that it would maintain interest rates in the range of 3.5% to 3.75% and acknowledged that the situation in the Middle East brings uncertainty to the economic outlook. Federal Reserve Chairman Jerome Powell stated at the press conference that the committee had discussed whether another rate hike was necessary but emphasized that this is not the current baseline scenario. He also noted that he would not describe the current economic situation as stagflation, believing that the unemployment rate is still close to long-term normal levels and that inflation is far from the high levels seen in the 1970s. Nevertheless, concerns about stagflation risks continue to rise. Subadra Rajappa, head of research at Société Générale, stated that the PPI data exceeded expectations both overall and at the core level, further reinforcing stagflation concerns and supporting the Fed's stance to keep rates unchanged this year. Meanwhile, the U.S. Treasury yield curve has shown a "bear flattening" trend, where short-term yields are rising faster than long-term yields, reflecting market expectations that monetary policy may be tighter than previously thought, while also adopting a more cautious outlook on future economic growth. Data shows that the yield spread between the 2-year and 10-year Treasury notes has narrowed to 51.5 basis points, significantly down from about 74 basis points in early February. Gary Schlossberg, a strategist at Wells Fargo Investment Institute, noted that the flattening of the yield curve indicates that the market is more cautious about the Fed's policy outlook, which has also intensified concerns about stagflation. However, he believes that this risk is not yet sufficient to evolve into a long-term stagflation scenario similar to that of the 1970s, and is more likely to be a temporary phenomenon. Some market participants still hold a relatively mild view on stagflation risks. Tom Hainlin, a strategist at Bank of America Asset Management, pointed out that the current situation resembles a typical energy shock event rather than a comprehensive stagflation cycle. 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