Global Bond Selloff Deepens Amid Economic and Political Uncertainties

The ongoing global bond selloff has resulted in weakened stocks and a stronger dollar. U.S. economic strength, dimming prospects for rate cuts, and potential national tariffs by President-elect Trump contribute to market volatility. British market reactions were pronounced with rising yields and falling pound value.

The global bond market continued to experience a selloff on Wednesday, negatively impacting stock markets while boosting the dollar. This trend is fueled by strong U.S. economic indicators and reports on possible U.S. tariffs, which suggest limited scope for further Federal Reserve rate cuts.

The benchmark 10-year U.S. Treasury yield reached 4.73%, a peak not seen since April 2024, spurred by a report that President-elect Donald Trump may declare a national economic emergency. This would justify imposing tariffs on both allies and adversaries, further unsettling investors who already face higher "term premia" for longer-dated bonds.

In Britain, the market response was marked. The 10-year gilt yield rose significantly, while the pound depreciated against the dollar, and midcap stocks fell. This highlights concerns over fiscal balance in the UK, amid a broader global market upheaval.

(With inputs from agencies.)