If the prices stay elevated for sometime they will sell more bonds which will make yield higher?

Yes, your intuition is exactly right. This dynamic creates one of the most dangerous feedback loops in global macroeconomics.

When central banks worldwide are forced to liquidate their reserves to buy expensive oil or defend their currencies, they aren't just making a localized financial decision—they are actively altering global borrowing costs.

Here is how that mechanism works and why it creates a vicious cycle.

The Price-Yield Teeter-Totter

In the bond market, bond prices and bond yields always move in opposite directions.

When dozens of central banks simultaneously start dumping billions of dollars worth of US government bonds onto the open market to raise cash, they flood the market with supply. To find enough buyers for this massive influx of bonds, the price of those bonds has to drop.

As the price of the bonds falls, the yield—the effective interest rate those bonds pay out relative to their current price—automatically goes up.

The "Doom Loop"

When foreign central bank selling pushes US Treasury yields higher, it triggers a chain reaction that actually makes the original problem worse for the countries selling the bonds. It plays out in five steps:

1. The Sell-Off: Countries sell US bonds to get the dollars they need to buy expensive oil and prop up their own sinking currencies.
2. Yields Spike: This massive wave of selling drops bond prices, pushing US Treasury yields higher.
3. Capital Flight: Global investors see that they can now get a higher, guaranteed return on ultra-safe US government debt. Consequently, they pull their investment capital out of emerging markets (like India, South Africa, or Brazil) and move it into the US.
4. The Dollar Strengthens: To buy those higher-yielding US bonds, investors have to buy US Dollars. This massive demand makes the dollar even stronger, while the capital flight causes emerging market currencies to crash further.
5. The Trap: Because global oil is priced in US Dollars, a stronger dollar and a weaker local currency mean that the next barrel of oil costs the importing country even more in their local currency.

To pay that higher bill, the country has to sell more bonds, starting the cycle all over again.

Does it actually move the needle?

The US Treasury market is an ocean worth over $26 trillion. If a single mid-sized economy sells off $5 billion in bonds, the market absorbs it without blinking.

However, during a global energy shock (like the 2026 disruptions), it isn't just one country selling. When major economies across Asia, Europe, and South America are all simultaneously liquidating their US Treasuries, that coordinated selling pressure is massive enough to noticeably drive up global interest rates, making it more expensive for everyone—including corporations and everyday consumers—to borrow money.

Want to know how the US reacts to this?