Bond Selloff Fades as Oil Cools, Lifting Stocks: Markets Wrap

(Bloomberg) — Bonds steadied after a selloff that drove global yields to the highest in decades as oil’s rally lost steam, helping US stocks extend an advance for the week.

The 10-year Treasury yield slipped four basis points to 5.16%, paring a two-day surge of more than 20 basis points. US and Iran negotiators exploring a phased deal to reopen the Strait of Hormuz sent Brent crude lower toward $105 a barrel. S&P 500 futures rose 0.3%, with chipmakers rallying in early trading. The dollar snapped a five-day run of gains.

Fluctuations in oil prices are likely to remain a key driver for markets at a time when elevated energy costs are stoking inflationary pressures and underpinning the outlook for further monetary policy tightening. Swaps fully price three additional Federal Reserve quarter-point hikes over the next year, a prospect that could hold back risk appetite and keep bond yields high for some time.

“We are in a one-factor world over the coming days, with oil prices driving rates and rates driving all asset classes,” wrote Mohit Kumar at Jefferies. “Equity markets have behaved relatively well despite the rise in rates. Optimism over AI and demand for AI infrastructure has helped.”

Europe’s Stoxx 600 headed for its biggest weekly gain since August, fueled by a rebound in economically sensitive shares. Regional bonds also found some relief after the global selloff, with UK gilts outperforming.

Longer-dated bond yields continue to reflect fiscal concerns and the likelihood of strong government borrowing, said Francisco Simon at Santander Asset Management. While the prospect of restored crude flows from the Middle East will ease pressure on rates, a run of strong economic data suggests the global economy can withstand tighter financial conditions, he said.

“Market direction will likely be determined by whether easing geopolitical tensions can outweigh the ongoing message from the macro data,” Simon said. “Growth remains resilient, and that is keeping upward pressure on yields despite some relief on the energy front.”

In Japan, the yen headed for its biggest daily gain in two weeks after Finance Minister Satsuki Katayama’s latest comments on the currency kept traders on alert for the risk of intervention.

The yen climbed as much as 0.8% to 157.67 against the dollar, leading gains among Group-of-10 peers. Katayama said US President Donald Trump raised concerns about the currency in talks with Prime Minister Sanae Takaichi in New York earlier this week, easing some of the pressure after a resurgent dollar had driven the currency close to the 160 level.

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.8% as of 10:33 a.m. London time S&P 500 futures rose 0.3% Nasdaq 100 futures rose 0.6% Futures on the Dow Jones Industrial Average rose 0.3% The MSCI Asia Pacific Index rose 0.7% The MSCI Emerging Markets Index rose 0.1% Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.1% to $1.1392 The Japanese yen rose 0.6% to 157.90 per dollar The offshore yuan fell 0.1% to 6.7239 per dollar The British pound rose 0.1% to $1.3237 Cryptocurrencies

Bitcoin rose 0.4% to $84,696.04 Ether rose 0.8% to $2,708.33 Bonds

The yield on 10-year Treasuries declined four basis points to 5.16% Germany’s 10-year yield was little changed at 3.59% Britain’s 10-year yield declined four basis points to 5.35% Commodities

Brent crude fell 1.4% to $105.15 a barrel Spot gold rose 0.5% to $4,296.12 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Neil Campling.

©2026 Bloomberg L.P.