Global Markets Under Pressure Amid Rising Government Debt Loads
By Dow Jones Newswires StaffGlobal bond markets remained under pressure on Wednesday amid mounting concern over rising government debt loads and deficits that also triggered falls across global stock markets in Tuesday's session. Early in Europe, the 30-year U.S. Treasury yield jumped again and the 30-year U.K. bond yield set fresh multi-year highs. Safe-haven gold, meanwhile, hit a fresh record high, while global stock markets were mixed with a bounce across European markets after Asian markets closed lower. The dollar was volatile, while the Japanese yen and British pound fell.Ahead, further indications on the health of the U.S. labor market will be provided from JOLTS job openings data for July.The 30-year U.S. Treasury yield was up to 5.002% early in European trade, the highest level since July, Tradeweb data showed. Julius Baer's Dario Messi said several factors are contributing to these moves, including inflation and fiscal concerns, worries about the Federal Reserve's independence, and debt issuance picking up after the summer break. "Ultimately, it is likely just more evidence for a broader decrease of investor appetite of very long-dated bonds, in our view," the head of fixed income said in a note. The two-year U.S. Treasury yield was up 0.4 basis point at 3.80% and the 10-year yield rose 2.3 basis points to 4.299%.Yields on U.K. government bonds, or gilts, extended Tuesday's sharp gains, taking the 30-year yield to its highest since 1998. Although gilts are tracking moves in long-dated bonds globally they are considered particularly vulnerable amid concerns about the sustainability of U.K. public finances as well as elevated inflation. Thirty-year gilt yields were last up to 5.747%, LSEG data show, while Japanese bond yields also soared.Gold futures set another all-time high earlier in the session amid growing U.S. interest rate cut bets and broader market volatility. Futures were last up 0.2% at $3,597.80 a troy ounce, having earlier climbed as high as $3,616.90/oz. The precious metal is up nearly 5% week-to-date amid a flight to safe-haven assets after equity and bond market selloffs.The U.S. dollar was volatile, easing slightly against a basket of currencies in early trade then gaining amid falls in major currencies such as the yen and sterling.Global equities markets were mixed; U.S. futures for the S&P 500 were up 0.2%, futures for the Dow Jones Industrial Average declined 0.1% and Nasdaq futures were up 0.4% after all the main indexes closed lower on Wall Street.European stock markets bounced modestly after Tuesday's falls; the pan-European Stoxx Europe 600 climbed 0.4% in morning trading. France's CAC 40 gained 0.5% and Germany's DAX climbed 0.4%, while the U.K.'s FTSE 100 added 0.2%. Still, stocks in Asia closed lower across the board.Oil prices eased in early trade, but remained near recent highs after the U.S. sanctioned a network of companies and vessels for smuggling Iranian oil disguised as Iraqi oil. Brent crude and WTI were both down 0.5% to $68.81 and $65.28 a barrel, respectively, after settling higher in the previous session.Write to Barcelona Editors at [email protected]