Yields in Japan, Britain, Europe and Australia are also on the rise as Brent crude oil prices remain well over US$100 a barrel.
“The fallout continues and local markets are still running scared,” ANZ strategist David Croy said.
In bond markets, yields rise when selling pushes prices lower.
The yield on the NZ Government 2036 bond was up four basis points at 5.10%, after gaining 15 basis points on Thursday.
Elsewhere, yields were at fresh highs across the curve, with the 2028s trading at 3.95% and the 2031s at 4.60%.
The longest bond – the 2054 – yielded 5.63%.
The short end of New Zealand’s yield curve responds to local monetary policy decisions on the level of the Official Cash Rate, while longer-dated bonds track offshore markets.
“The market is still broadly observing that tendency – the short end is paying more attention where the OCR is headed than they are to global rates,” Croy said.
“But the problem with this particular global shock is that the shock is oil prices, and oil prices will dictate where headline inflation goes.
“As oil prices rise, they’re also pushing up short-end rates because of expectations of what the Reserve Bank might have to do.
“I would say the market’s been pretty badly beaten up.
“It’s had a real thumping this week, and when you get these huge offshore moves, the kind of immediate reaction here tends to go with it,” Croy said.
“Then once volatility settles down, what you often observe is that markets become much more discerning of local factors, and you get a little bit more differentiation.”
BMI, a unit of Fitch Solutions, said a credit crunch would be a material downside risk for developed markets.
“The rise in government bond yields in recent months has renewed concerns that a tightening of financial conditions could ultimately slow economic activity,” BMI said.
“Higher market interest rates do not automatically translate into a credit crunch.
“Nevertheless, sustained increases in funding costs can lead banks to tighten lending standards and become more selective in extending credit to households and firms,” it said.
“The result is a contraction in credit availability that amplifies the initial tightening in financial conditions,” BMI said.
“A credit crunch would constitute a meaningful downside risk for developed market economies.”
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
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