Global markets experienced a decline on Tuesday as bond yields and the US dollar traded near multi-month highs, driven by concerns that US interest rates may stay elevated for an extended period, Reuters reports.
Investors are adjusting their expectations for significant US rate cuts ahead of the November elections.
The US 10-year Treasury yield rose to 4.21%, its highest level since late July, signaling rising concerns that the US Federal Reserve may adopt a more cautious approach to rate cuts. Economic data pointing to US strength has dampened hopes for another large rate cut after the Fed’s half-point reduction in September. The probability of a quarter-point cut at the Fed’s Nov. 7 meeting has dropped from near certainty to 87%, according to CME’s FedWatch tool.
The MSCI All-World Index dipped 0.2%, and US futures signaled another weak market opening, following Monday’s losses in benchmark indices. Adding to market volatility is the tight US presidential race between Donald Trump and Vice President Kamala Harris, with Trump’s recent rise in betting polls boosting the dollar.
Despite the broader market weakness, European software giant SAP defied the trend, surging to an all-time high after raising its full-year targets. However, political and economic uncertainties have heightened concerns for investors, particularly in Japan, which faces a domestic election on Sunday. Japan’s Nikkei index fell 1.3%, touching its lowest point since early October, while the yen dropped to 151 per dollar.
As markets remain volatile, safe-haven assets like gold continued to rise, with prices up 0.6% to $2,735 an ounce. Oil prices also steadied, with Brent crude futures trading at $74 per barrel.
In the US, attention is turning to earnings reports from major companies, including General Motors, Texas Instruments, Verizon, and Lockheed Martin, for insights into the economic outlook.
