Stocks Post Worst Day Since March as Bonds Get Hit: 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
The biggest equity drop since March saw the S&P 500 falling 1.2%. A gauge of chipmakers — which had led a surge from war-driven lows — sank 4%. US 10-year yields topped 4.5% while those on Japan’s 30-year debt hit 4% for the first time. In the UK, a political crisis lifted long-bond rates to a 28-year high. The dollar extended this week’s gain. US crude settled above $105.
With no end in sight to the Iran conflict, speculation has 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 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, expectations for central-bank hikes, and worries around government debt as countries look to cushion the impact of higher energy prices,” said Angelo Kourkafas at Edward Jones.
A bond market spooked by fears of accelerating inflation will be an early test for incoming Fed Chair Kevin Warsh, according to Subadra Rajappa at Societe Generale Americas, who said it’s important he keeps expectations in check.
“While central banks cannot directly resolve a global energy shock by hiking rates, the prospect of fiscal stimulus appears to be complicating the inflation outlook,” Kourkafas noted. That said, he bets the Fed will avoid overreacting to what may prove to be a temporary situation.
Nevertheless, traders should continue paying attention to signals from the bond market. Bullish calls on stocks will be challenged if Treasury 10-year yields hit 5%, a level that usually depresses price-to-earnings ratios,” Lori Calvasina at RBC Capital Markets told Bloomberg Television.
Friday’s pullback in equities came after a surge fueled by solid corporate profits, signs of economic resilience and a revival of the artificial-intelligence trade. The “narrowness” of the rally had worried several market observers. Still, the S&P 500 posted a seventh straight weekly gain – the longest advance since December 2023.
“There are signs of extended positioning and extreme optimism, which could lead to a natural and healthy period of consolidation,” said Mark Hackett at Nationwide. “Ultimately, however, if the macro and earnings environment remain supportive, the path of least resistance is higher.”
Corporate Highlights:
SpaceX is seeking to file publicly for its long-awaited IPO as soon as Wednesday, according to people familiar with the matter. 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. 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. Boeing Co. appears to have secured its long-awaited order from China during Trump’s visit to the country, but whatever accord was reached remained nebulous on numbers, aircraft type and a sense of timing. 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 1.2% as of 4 p.m. New York time The Nasdaq 100 fell 1.5% The Dow Jones Industrial Average fell 1.1% The MSCI World Index fell 1.4% Currencies
The Bloomberg Dollar Spot Index rose 0.4% The euro fell 0.4% to $1.1620 The British pound fell 0.6% to $1.3317 The Japanese yen fell 0.3% to 158.78 per dollar Cryptocurrencies
Bitcoin fell 2.8% to $79,153.63 Ether fell 3.3% to $2,222.89 Bonds
The yield on 10-year Treasuries advanced 11 basis points to 4.60% Germany’s 10-year yield advanced 12 basis points to 3.17% Britain’s 10-year yield advanced 18 basis points to 5.17% Commodities
West Texas Intermediate crude rose 4.6% to $105.78 a barrel Spot gold fell 2.4% to $4,541.28 an ounce ©2026 Bloomberg L.P.
