The spectre of rising inflation put a match to the bond market on Monday and pounded ASX traded real estate and utilities stocks, as Brent crude oil recovered almost all of its ground lost during the pandemic and US inflation expectations hit a seven-year high.

Bond market gauges of inflation pressures – or break-even rates – jumped as Australia’s 10-year break-even rate climbed to 1.927 per cent, the highest since November 2018, and US 10-year break-evens touched 2.2 per cent, last hit in May 2014.

The Australian government 10-year bond yield rose to 1.265 per cent, its highest since March 2020. In a session of strong gains for the S&P/ASX 200 Index, which hit an 11-month high, Dexus Group was down 1.5 per cent to $8.76 and Sydney Airport down 2 per cent at $5.79.

But Brent crude oil futures climbed to $US59.90 a barrel, up US56¢, and just below the $US60 a barrel recorded in February last year before the pandemic struck.

Oil prices closely align with expectations of economic growth and markets are reacting to signs that a vaccine-driven synchronised global recovery is under way.

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