The wave of sovereign bond selling intensified globally on Tuesday, fueled by fears of persistent inflation. In Japan, ten-year government bond yields hit 3% for the first time since 1996, while in Germany values had not been this high since 2011. In the United Kingdom, 30-year bonds reached their highest level since 1998. This move dragged Wall Street into negative territory, with the Dow Jones falling 0.49% to 52,926.9 points, the S&P 500 dropping 0.68% to 7,633.99 points and the Nasdaq losing 1.34% to 26,017.3 points.
BCP analysts attribute this correction to the prospect of further interest rate hikes by major central banks. Middle East tensions pushed oil prices higher, with Brent rising 2.22% to $92.5 and WTI advancing 2.67% to $88.95. In the Eurozone, inflation accelerated from 2.9% in July to 3.3% in August, increasing the likelihood of ECB rate hikes as early as September.
Sovereign debt yields reflect this expectation: the US ten-year Treasury yield rose to 4.78%, the highest intraday level since January 2025, while the 30-year rate advanced to 5.27%, near multi-decade highs. A Bloomberg global indicator is reaching its highest level since 2008. Statements by the Federal Reserve chairman at Jackson Hole reinforced the thesis of commitment to bringing inflation back to the 2% target.
Wall Street thus enters September — historically the weakest month of the year for equities — after closing August with gains, although the S&P 500 was already showing signs of losing momentum at the end of summer. The day in the US was marked by the release of the JOLTS job openings report, the first in a series of labor market indicators this week, culminating on Friday with the monthly employment report.
