/Global Markets Fall After Bond Yields Surge – The Wall Street Journal

Global Markets Fall After Bond Yields Surge – The Wall Street Journal


International stocks dropped Friday, tracking declines in U.S. indexes, as a selloff in bonds helped dent investor appetite for richly valued shares.

However, U.S. Treasury notes rose in price, regaining some of the previous session’s losses, and futures suggested stocks in New York could stabilize or gain slightly in Friday trading.

Investors said the market had been reassessing prospects for interest-rate increases by the U.S. Federal Reserve, despite assurances from Chairman Jerome Powell that the central bank won’t raise rates anytime soon.

“What has happened in recent weeks is the markets have had to reprice expectations of the Federal Reserve’s rate hikes,” said Dwyfor Evans, head of macro strategy for the Asia-Pacific region at State Street Global Markets in Hong Kong.

He said the pickup in bond yields would have knock-on effects on areas such as corporate lending and mortgage rates. “That’s why equities will come under pressure here, because rising yields will have some impact on the real [economy] and earnings might have to slow,” Mr. Evans said.

Original Source