Global bond markets were on track for one of their weakest months in years at the end of September, pressured by rising government borrowing needs, persistent inflation and higher energy costs. At the same time, equity markets remained comparatively resilient, supported by solid corporate earnings, economic strength and continued enthusiasm around artificial intelligence.
U.S. Treasury yields remained elevated, with the benchmark 10-year yield near 5.21%, just below its highest level since June 2007. The yield was set to rise by more than 45 basis points over the month, reflecting the sharp increase in borrowing costs facing governments, companies and households.
European bond markets also came under pressure. Ten-year German and French government bond yields recently reached multi-year highs, adding to concerns over fiscal conditions and the broader impact of higher interest rates across the region.
Despite the selloff in bonds, stock markets showed greater resilience. Asian and European equities advanced during Wednesday’s session, while U.S. stock futures pointed to a slightly firmer open. Technology shares continued to receive support from investor interest in AI-related growth, even as higher yields increased pressure on other parts of the equity market.
In currency markets, the U.S. dollar was heading for a monthly gain of around 2%, supported by stronger Treasury yields. The euro traded near a 16-month low and was on course for a monthly decline of roughly 2.3%, while sterling was also set for a monthly loss. The yen performed better, supported partly by concern over potential intervention by Japanese and U.S. authorities.
Commodities remained another major driver of market sentiment. Brent crude was trading above $102 a barrel, while U.S. crude hovered near $89, with both benchmarks heading for monthly gains amid concerns over continued supply disruption in the Middle East. Gold also edged higher to around $4,199 an ounce.
The contrast between weak bond performance and relatively firm equities highlights the tension facing global markets as investors weigh higher borrowing costs and inflation risks against strong corporate earnings and continued confidence in selected growth sectors.
