Global equities slipped on Wednesday as the recent bond market selloff showed signs of moderating, though benchmark yields remained near multi-decade peaks. The MSCI Asia-Pacific index excluding Japan fell 1.7%, with Japan’s Nikkei declining 2.6% as investors reassessed risk exposure amid elevated borrowing costs.
U.S. Treasury yields steadied after climbing to a 20-year high of 5.3371% on Tuesday, with the 10-year note last trading around 5.28%. The surge in long-end yields has weighed on equities, particularly growth-sensitive sectors, as borrowing costs rise. In Europe, the 10-year and 30-year German bund yields hit their highest levels since 2011, while France’s 30-year yield has climbed nearly 50 basis points since late June.
The bond rout has extended to Japan, where the 10-year yield approached 3%, a level not seen since the Bank of Japan began normalizing policy. The shift has driven investors toward safer assets, though the yen’s proximity to the 160-per-dollar level—last at 159.44—limited its appeal as a haven. The euro held near $1.1576, while the Australian dollar strengthened to $1.4128.
Corporate debt markets reflected the strain, with Alphabet reportedly seeking to raise about A$5 billion ($3.5 billion) via an Australian-dollar bond sale. The U.S. Treasury was also scheduled to auction $16 billion in 20-year debt, adding to the heavy supply in a market already grappling with high issuance.
In equities, futures for the S&P 500 and Euro Stoxx 50 slipped about 0.1% ahead of U.S. retail sales data and homebuilding figures due later in the session. The upcoming Federal Reserve minutes from July’s meeting are also expected to draw attention, with markets parsing any signals on future policy direction.
Anthropic’s annual revenue run-rate surpassed $65 billion at the end of July, underscoring the tech sector’s rapid expansion despite broader market volatility. However, the sector lagged as investors favored defensive plays. Lowe’s, Target, and TJX are among companies reporting earnings this week, with Home Depot releasing results on Tuesday.
The bond selloff has been driven by growing concerns over fiscal discipline, with deVere Group CEO Nigel Green noting that investors are increasingly pricing in the risk of unchecked government spending. ANZ senior rates strategist Jack Chambers added that long-end bond investors are becoming more price-sensitive amid elevated debt issuance, reducing the market’s capacity to absorb new supply without further yield increases.
Commodities provided a mixed backdrop, with Brent crude futures holding above $90 a barrel. The U.S. temporarily paused a 50% tariff on Canadian goods for three days, a move that offered limited relief to cross-border trade flows.
The day’s losses capped a volatile stretch for global markets, as investors balance the pullback in bonds with lingering uncertainty over central bank policy and economic growth.
