Rising U.S. Treasury yields are tightening financial conditions and pressuring global equities, with the 30-year yield surging to 5.44% on Thursday — its highest level since July 2004. The 10-year yield touched 5.098%, the highest since before the 2008 financial crisis, while the 2-year yield held at 4.852%. Every point on the Treasury curve except the two-year now trades above 5%, a level last seen broadly during the 2007–08 crisis.
The selloff continued even after the U.S. Treasury announced a buyback of up to $6 billion in 20- and 30-year bonds on Wednesday. It was fueled by stronger-than-expected U.S. business activity data: S&P Global's flash PMI showed manufacturing at 57.0 versus a 53.6 forecast and services at 58.7 versus an expected 55.8, indicating the economy is expanding at its fastest pace in more than five years.
UBS strategists Gerry Fowler and Sutanya Chedda said rising yields reflect stronger, broadening growth rather than inflation fears, driven by a synchronized capex cycle in defense, AI equipment, infrastructure and power. They warned this represents a regime change not priced in for thirty years, and that rising velocity against a stable monetary base could lead to more rate hikes rather than fewer.
On Wall Street, the Dow Jones Industrial Average opened 179.66 points lower at 51,331.93, while the S&P 500 fell 0.48% to 7,669.46 and the Nasdaq Composite dropped 0.74% to 26,737.60. The CBOE Volatility Index rose 4.55% to 15.87. Micron lost 2.18%, Nvidia fell 1.23%, and SanDisk dropped 2.30%. Meta Platforms rose 1.34% ahead of the second day of its Meta Connect developer conference; Apple slipped 0.50%, Amazon fell 1.31%, and Alphabet dipped 0.34%. Oil gained with WTI up 2.08% to $94.08 and Brent up 2.23% to $105.38, while gold fell 0.16% to $4,311.47 and silver dropped 1.70% amid higher opportunity costs.
European equities were more cautious, with the STOXX 50 and STOXX 600 near flat as investors watched the U.S.-Iran conflict and a summit between the U.S. and Chinese presidents. UBS analysis of MSCI Europe found that since March, only 42% of the index gained by weight in weeks when yields rose, compared with 64% in weeks when yields fell — a 22-percentage-point gap, the widest on record. The bank said sharp weekly increases in yields above 4.5% cause the most damage to breadth, and recommends low yield-sensitive stocks with earnings growth strong enough to offset discount-rate pressure. Energy, banks, chemicals and basic resources have gained over the past three months, while construction, telecoms, utilities and consumer stocks have declined. Technology and banking stocks were among the weakest performers Thursday, with SAP, Infineon, Mercedes-Benz and Rheinmetall falling, and H&M dropping nearly 3% after third-quarter results missed expectations.
For digital asset markets, the mix of higher risk-free yields, rising discount rates and a stronger dollar is a challenging backdrop, typically reducing appetite for risk-sensitive assets such as cryptocurrencies.
