Global Stocks Slide as Fiscal Concerns Push Bond Yields Higher
Global equities fell on Tuesday while long-dated European bond yields surged to multi-year highs. Investor sentiment weakened amid rising concerns over government debt levels worldwide. Meanwhile, the U.S. dollar strengthened, and gold touched a fresh record.
A divided U.S. appeals court recently ruled that most of President Donald Trump’s tariffs were illegal. However, the tariffs will remain in effect until October 14 to allow time for a Supreme Court appeal.
On Wall Street, stocks moved lower. The Dow Jones dropped about 1%, the S&P 500 fell 1.2%, and the Nasdaq declined 1.5%.
Bond Market Pressures Mount
European bond yields hit new milestones. Britain’s 30-year yield rose to 5.69%, the highest since 1998. France’s 30-year yield climbed to 4.49%, near its 2009 peak. Germany’s equivalent rose to 3.39%, the highest since 2011.
Bond yields rise when prices fall, and markets have been rattled by heavy issuance and fiscal concerns. Over €100 billion in new European bonds are expected in September and October, further testing demand.
U.S. yields also climbed, with the 30-year Treasury at 4.97% and the 10-year note at 4.27%.
Political and Currency Turmoil
Fiscal debates in Europe added to volatility. French Prime Minister Francois Bayrou faces a confidence vote next week, while U.K. finance minister Rachel Reeves is expected to announce tax hikes in the autumn budget.
Sterling tumbled 1.2% against the dollar to $1.338, also weakening against the euro. The yen fell as well, sliding after the resignation of a senior Japanese official. The euro dropped 0.47% to $1.165. In contrast, the dollar gained safe-haven appeal.
U.S. Data in Focus
Markets are closely watching a series of U.S. economic reports this week. Job openings, private payrolls, and Friday’s nonfarm payrolls report are expected to clarify the health of the labor market. According to CME FedWatch, traders see an 89% chance of a 25-basis-point rate cut later this month.
Precious Metals and Oil React
The uncertain backdrop boosted precious metals. Gold hit a record $3,508.5 per ounce, while silver surged to a 14-year high before retreating as the dollar rebounded.
Oil prices also edged higher ahead of Sunday’s OPEC+ meeting. Brent crude gained about 1% to $68.79 a barrel amid concerns that the Russia-Ukraine conflict could disrupt supplies.
