Key facts
- US 10-year Treasury yield hit a 19-year high of 5.2251%.
- US 30-year Treasury yield reached 5.5016%, its highest since 2004.
- Treasury buybacks managed only $4 billion of the $6 billion scheduled.
- Japan's government yields surged to 1996 levels.
- Norway's Norges Bank implemented a rate hike.
- Futures price in a 70% chance of a Fed rate hike next month.
Treasury yields have surged to multi-year highs, with the benchmark US 10-year rate climbing to a 19-year peak of 5.2251% and the 30-year yield hitting its highest level since 2004 at 5.5016%. This rapid increase, occurring without an apparent trigger, has led to a broad market sell-off that has extended to Asia, with Japanese government yields reaching 1996 levels and Australian yields nearing a 15-year high.
The rising cost of risk-free borrowing is expected to tighten financial conditions globally. In response to inflationary pressures, Scandinavian central banks have taken action, with Norway's Norges Bank implementing a surprise rate hike and Sweden's Riksbank signaling a likely follow-up by year-end. Despite the bond market turmoil, tech investors remain largely unfazed, and futures still price in a significant chance of further rate hikes from the Federal Reserve this cycle.
European shares are anticipated to open higher, supported by a dip in oil prices, though Brent crude remains elevated at $105 a barrel amid ongoing Middle East conflict. Key economic data releases and speeches from central bank officials are expected to influence markets.