Global bond market selloff intensifies: 10-year Japanese government bond yield hits a 30-year high; 10-year U.S. Treasury yield continues its decline; U.S. equity index futures fall, oil prices rise, and gold prices fall.

Tony Miano of Wells Fargo Investment Institute stated: “The market is telling us that we have entered a genuine re-tightening cycle. The entire yield curve is being repriced simultaneously—meaning higher discount rates for equities, higher mortgage and corporate borrowing costs, and a higher hurdle rate for risk assets.” Key market moves: S&P 500 futures fell 0.3%; Nasdaq-100 futures fell 0.3%. Europe’s STOXX 50 opened down 0.53%; Germany’s DAX fell 0.57%; the UK’s FTSE 100 declined 0.36%; France’s CAC 40 dropped 0.48%. Japan’s Nikkei 225 closed up 0.8% at 65,513.99. Japan’s Topix index closed down 0.4% at 4,075.30. The 10-year U.S. Treasury yield rose 1 basis point to 5.12%. The 10-year Japanese Government Bond (JGB) yield surged 9 basis points to 3.075%. The Bloomberg Dollar Spot Index was little changed. The U.S. dollar strengthened 0.1% against the yen to 158.49. Brent crude oil rose 0.2% to $98.33 per barrel. Spot gold fell 0.12% to $4,281.90 per ounce. Global bond selloff spreads; JGB yields surge to highest since 1996 Global bond markets are experiencing a historic, synchronized selloff, with Japan’s bond market—having lagged during the holiday period—now catching up sharply. On Thursday, the 10-year JGB yield soared 10 basis points to 3.075%, the highest since August 1996; the 5-year and 30-year JGB yields rose to 2.37% and 4.134%, respectively. Meanwhile, the 10-year U.S. Treasury yield approaches a 19-year high, and the 5-year Treasury yield briefly breached 5%, driving yields across major global bond markets higher along the entire curve. This selloff is driven by a confluence of external and domestic factors. Externally, rebounding oil prices have intensified inflation concerns; robust U.S. economic data has dampened expectations for Federal Reserve rate cuts; and weak demand for the $70 billion 5-year Treasury auction directly pushed yields higher—spreading the U.S. Treasury selloff globally. Domestically, the Bank of Japan’s recent rate hike—without clarifying its future pace—has heightened market expectations for further tightening. Combined with spillover effects from global long-term borrowing cost repricing, Japan’s bond market is bearing concentrated pressure.

After the FOMC meeting, both U.S. equities and Treasuries fell; ‘The New Fed Watcher’ notes that energy and AI investments are reshaping the inflation landscape.

The Federal Reserve’s resumption of rate hikes—its first in over three years—did not come as a major surprise to markets. However, Chair Worshe’s limited guidance on the future path of interest rates during his post-meeting press conference instead intensified investor concerns about persistently higher rates and longer-lasting inflationary pressures—prompting selloffs in both U.S. equities and Treasuries. On Wednesday, the Fed raised its target range for the federal funds rate by 25 basis points to 3.75%–4.00%, marking its first hike since 2023. Prior to the meeting, U.S. equity and Treasury markets had remained relatively stable; but during Chair Worshe’s press conference, risk assets and long-dated Treasuries experienced pronounced selling pressure. At closing, the Dow Jones Industrial Average fell 631.21 points—or 1.21%—to 51,461.90; the S&P 500 dropped 33.92 points—or 0.45%—to 7,551.81; and the Nasdaq Composite edged down just 0.01% to 25,978.42. The Treasury market adjustment was even more direct. The 2-year Treasury yield rose 6.5 basis points to 4.725%, its highest closing level since July 2024; the 10-year yield climbed 0.8 basis points to 5.003%, reaching a 19-year high; while the 30-year yield dipped slightly by 1.7 basis points to 5.346%. ‘The New Fed Watcher’ Timiraos: Energy shocks and AI investment are reshaping the inflation landscape Nick Timiraos—the Wall Street Journal reporter widely regarded by markets as a key conduit for Fed thinking—observed that this rate hike reflects a fundamental shift in the inflation environment confronting the Fed. Over the past year, the Fed had cut rates to counter risks of labor market weakening. Yet the labor market failed to deteriorate as feared: unemployment actually declined—from 4.5% to 4.1%. Meanwhile, inflation has failed to converge further toward the 2% target. More critically, energy prices and AI-related investment are jointly exerting new upward pressure on inflation. The Iran conflict has reignited energy price increases, with diesel prices rising especially sharply due to refining bottlenecks and other constraints. Former New York Fed President William Dudley remarked that diesel prices are behaving “as if crude oil were trading at $200 per barrel.” At the same time, AI-driven infrastructure investment—including in data centers—is rapidly boosting aggregate demand in the economy.

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