S&P 500 futures fell 0.5% and Nasdaq 100 futures dropped 1.2% on Tuesday as a deepening global bond sell-off and a jump in oil prices past $90 a barrel weighed on equities. Long-term borrowing costs across major economies climbed to multi-decade highs on inflation concerns, deficit fears and surging AI-related bond issuance.
Futures tracking the S&P 500 fell 0.5% on Tuesday, as a renewed sell-off in government bonds and rising oil prices weighed on stocks. Nasdaq 100 futures dropped 1.2% over the same session.
Bond yields climb to multi-decade highs
The sell-off pushed the yield on 30-year US Treasuries up 0.02 percentage points to 5.33% on Tuesday, the highest level since 2007. That took the yield's rise this week to 0.06 percentage points, up from below 5% at the start of last month.
European long-dated debt weakened too. The 30-year German Bund yield rose 0.04 percentage points to 3.78% on Tuesday, its highest level since the Eurozone crisis in 2011. French yields of the same maturity climbed 0.03 percentage points to 4.9%, the highest since 2008.
In the UK, the 30-year gilt yield rose as much as 0.04 percentage points to 5.86% on Tuesday morning, within touching distance of a post-1998 high reached in the early weeks of the Iran war. Japan's 30-year yields rose 0.06 percentage points to 4.14% on Tuesday, close to their highest ever level.
Oil prices add to the pressure
Brent crude closed above $90 a barrel yesterday for the first time in two weeks and traded around $91.25 this morning. Investors fear governments may need to spend more to shield businesses and consumers from higher energy prices tied to the Iran war.
Fiscal concerns weigh on sentiment
The US debt pile is nearing $40tn, adding to the strain on long-term borrowing costs. According to the Financial Times, Derek Halpenny, head of global markets research at MUFG, said "there remains zero appetite in the US for addressing the US fiscal position."
By contrast, yields in China moved the opposite way. Weak growth and consumer spending there pushed 10-year yields down 0.01 percentage points to 1.67%, their lowest level since July last year.
Source: Financial Times
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