“The bump in oil prices naturally translates to a bump in concerns about inflation and a possible rate hike by the Fed,” O’Hare said.
Inflation data that is in line with expectations, or higher than anticipated, would raise expectations of a hike, said Forex.com analyst Fawad Razaqzada.
Before then, the European Central Bank is widely forecast to lift eurozone interest rates on Thursday.
Inflation concerns have been driving yields on government debt higher as investors demand greater returns.
The yield on 10-year US Treasury bond jumped Wednesday to its highest level since 2023, despite the Treasury Department announcing an expanded buyback program.
This came as officials sought to rein in a rise in borrowing costs, but the buyback plan disappointed investors.
Markets are also concerned about an escalating trade fight between Washington and Ottawa, with the Trump administration on Tuesday announcing an incoming import ban, including on alcoholic beverages.
Iran on Wednesday launched fresh attacks against US targets in the Middle East in retaliation for American strikes on Iranian oil tankers, dragging the foes deeper into war.
Tehran’s powerful Revolutionary Guards said they attacked 20 US vessels trying to pass through the strategic Strait of Hormuz, largely controlled by Iran since the war erupted.
Apart from the war, Apple unveiled its first foldable phone on Wednesday. Its shares closed 0.3 per cent down.
