Britain and Canada reported above-forecast core inflation jumps for April over the past 24 hours - cutting across interest rate easing expectations in both countries and sending long-term government borrowing costs higher for both.
On top of that, the crude oil prices jumped more than 1% on Wednesday and briefly clocked their highest in a month after CNN reported Israel was preparing to strike Iran's nuclear facilities.
The darker global inflation picture comes as U.S. Federal Reserve officials remain wary of tariff-related price hikes in America.
Atlanta Fed chief Raphael Bostic said U.S. businesses may have run out of strategies to delay changing prices or employment in response to higher import taxes and the economy could soon face a wave of price increases.
"If these pre-tariff strategies have run their course, we're about to see some changes in prices, and then we're going to learn how consumers are going to respond to that," said Bostic.
Another Fed interest rate cut is now not fully priced into futures markets until October.
This latest bout of inflation anxiety comes at nervy moment in bond markets, with Japan's ultra-long government bond yields spiking sharply this week after a poor debt auction there.
The U.S. Treasury is now due to sell some $16 billion of 20-year bonds later on Wednesday on the heels of Moody's decision last Friday to remove the last U.S. AAA credit rating. Both 20 and 30-year Treasury yields are back above 5% and stalking their highest levels since 2023.
With long-term bond markets on edge, the bumpy passage of President Donald Trump's fiscal plan doesn't help.
Trump's tax cut and spending bill faces a critical stress test on Wednesday as Republicans in the House of Representatives try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states. The gate-keeping House Rules Committee scheduled an unusual overnight hearing expected to run well into daylight hours.
The bill would extend the 2017 tax cuts that were Trump's signature first-term legislative achievement, and also add tax breaks on income from tips and overtime pay that were part of his election campaign trail. Nonpartisan analysts say it could add $3 trillion to $5 trillion to the federal government's $36.2 trillion debt pile.
If it clears the committee, House Speaker Mike Johnson could push for a vote on the House floor as soon as Wednesday - with Republicans holding a narrow 220-213 seat majority.
U.S. stock futures were down again ahead of today's open, after the S&P500 closed 0.4% in the red on Tuesday.
The dollar fell again too, with traders keeping one eye on the G7 finance chiefs meeting in Canada this week for any signs of U.S. pressure for a weaker dollar as part of its bilateral trade negotiations.
Britain's pound was the big gainer - hitting its highest since February 2022 against the dollar after the hot UK inflation report.
In today's column, I discuss the recent turbulence in Japan's bond market and how it signals a potential change in appetite from Japanese investors that could have significant implications for U.S. government debt.
