Stocks Fall as Inflation Jitters Lift Bond Yields: Markets Wrap
(Bloomberg) — A selloff in global bonds halted a rally in stocks, with concern intensifying that central banks will be forced to tighten policy to keep inflation in check amid persistently elevated oil prices.
Equities dropped around the world, with the S&P 500 falling 1%. Technology shares bore the brunt of the selling after leading gains from 2026 lows. US 10-year yields topped 4.5% while Japan’s 30-year yield hit 4% for the first time. In the UK, a political crisis lifted long-bond rates to a 28-year high. The dollar was set for its best week since March. US crude rose to $104.
With no end to the Iran conflict in sight, concerns have grown that the effective closure of the Strait of Hormuz will deepen the energy disruptions that risk fueling inflation. Back-to-back data this week showed mounting war-driven price pressures, prompting traders to boost bets the Federal Reserve will raise rates.
President Donald Trump said he didn’t push his Chinese counterpart Xi Jinping to pressure Tehran to revive Hormuz, offering no sign of a breakthrough in the standoff over the waterway. China believes the strait should be reopened as soon as possible, Xinhua reported, citing Foreign Minister Wang Yi.
While a geopolitical advancement would help in the short term, inflation will take longer to come down, according to Florian Ielpo at Lombard Odier Asset Management. Markets are adjusting to that reality, he noted.
“Risk sentiment is being dented by a global rise in bond yields, driven by a combination of inflation concerns, rising expectations for central-bank rate hikes, and growing worries around government debt as countries look to cushion the impact of higher energy prices,” said Angelo Kourkafas at Edward Jones.
While central banks cannot directly resolve a global energy shock by hiking interest rates, the prospect of fiscal stimulus appears to be complicating the inflation outlook, Kourkafas noted.
“The recent rise in yields may be approaching levels that begin to weigh on equity performance,” he said.
Bullish calls on US stocks will be challenged if Treasury 10-year yields hit 5%, a level that usually depresses price-to-earnings ratios and “seems to spook people,” Lori Calvasina at RBC Capital Markets told Bloomberg Television.
That said, Kourkafas at Edward Jones continues to believe the Fed will avoid overreacting to what may prove to be a temporary energy-driven inflation shock.
“Prior to the conflict, global oil supply was exceeding demand, and when conditions normalize in the Strait of Hormuz, oil prices are likely to retrace toward prior levels,” he noted. “As long as earnings momentum remains strong, investors have good reason to avoid becoming overly negative.”
Corporate Highlights:
President Donald Trump said he discussed guardrails on artificial intelligence with Chinese leader Xi Jinping, while adding that Nvidia Corp.’s H200 chips also came up during a two-day summit in Beijing. China promised Boeing Co. it will purchase 750 planes and also said it will buy as many as 450 General Electric Co. engines, Trump said. Bill Ackman said Pershing Square has built a new stake in Microsoft Corp., taking advantage of a decline in the company’s share price to invest in a business that he said is stronger and more resilient than investors think. Applied Materials Inc., the largest US supplier of semiconductor equipment, gave sales and profit forecasts that far exceeded analysts’ estimates, fueled by soaring demand for AI computing and memory chips. Alphabet Inc. sold ¥576.5 billion ($3.6 billion) of bonds in the biggest ever yen deal by a non-Japanese company as competition to fund data centers and AI infrastructure intensifies. Some of the main moves in markets:
Stocks
The S&P 500 fell 1% as of 11:11 a.m. New York time The Nasdaq 100 fell 1.3% The Dow Jones Industrial Average fell 0.9% The Stoxx Europe 600 fell 1.5% The MSCI World Index fell 1.2% Currencies
The Bloomberg Dollar Spot Index rose 0.4% The euro fell 0.3% to $1.1629 The British pound fell 0.5% to $1.3341 The Japanese yen fell 0.2% to 158.64 per dollar Cryptocurrencies
Bitcoin fell 2.7% to $79,237.13 Ether fell 3.6% to $2,214.49 Bonds
The yield on 10-year Treasuries advanced nine basis points to 4.57% Germany’s 10-year yield advanced 11 basis points to 3.15% Britain’s 10-year yield advanced 17 basis points to 5.16% The yield on 2-year Treasuries advanced six basis points to 4.08% The yield on 30-year Treasuries advanced eight basis points to 5.11% Commodities
West Texas Intermediate crude rose 3.3% to $104.51 a barrel Spot gold fell 2% to $4,556.98 an ounce ©2026 Bloomberg L.P.
