US China Inflation Gap Reaches Bond Markets After Strait of Hormuz Shock

According to Bourse News, the disruption to energy flows through the Strait of Hormuz, which pushed global oil prices to near 120 dollars a barrel, has had starkly different inflation effects on the United States and China. Per an estimate from the Dallas Federal Reserve, a quarter-long closure of the Strait of Hormuz could raise annual US inflation in 2026 by about 0.6 percentage points; the yield on 10-year US Treasury notes reached around 4.7 percent in early August 2026.

By contrast, China's consumer inflation was just 1 percent in June 2026, as weak domestic demand and a 15.9 percent year-on-year drop in pork prices offset part of the energy pressure. China's 10-year government bond yield stood at about 1.71 percent in early August 2026, nearly three percentage points below the comparable US yield, a gap that keeps financing costs lower for the Chinese government and companies.