GLOBAL MARKETS: EQUITIES UNDER PRESSURE FROM RISING YIELDS

• Asian markets are mostly trading lower on Friday as a renewed sell-off in global bonds weighs on risk appetite. Long-term U.S. Treasury yields have climbed to multi-year highs, putting pressure on equities as investors reassess the outlook for interest rates.
• Japan is outperforming the broader region, with the Nikkei 225 rising around 1.3%. Technology stocks are recovering after the recent holiday break, while a weaker yen is providing additional support to Japanese exporters.
• U.S. markets ended Thursday broadly flat after a volatile session. The S&P 500 slipped around 0.02%, while the Nasdaq edged up 0.01% and the Dow Jones fell around 0.3%. Investors remain cautious as higher Treasury yields continue to weigh on equity valuations.
• The U.S. 10-year Treasury yield has climbed above 5.1%, reaching its highest level since 2007, while the 30-year yield has moved to its highest level in more than two decades. Rising long-term borrowing costs are becoming an increasingly important headwind for growth stocks and the broader equity market.

OIL, GOLD & GEOPOLITICAL RISKS REMAIN IN FOCUS

• Oil prices remain elevated after rising around 3% on Thursday following renewed concerns over Middle Eastern supply disruptions. Brent crude moved back above $100 per barrel after a Houthi missile attack on Saudi Arabia, although prices later eased from their highs amid reports of progress in discussions over reopening the Strait of Hormuz.
• European markets are heading into the final session of the week under pressure. The DAX fell around 0.6% on Thursday as higher oil prices and rising bond yields increased concerns over the European inflation outlook.
• The U.S.-China summit remains closely watched by investors. Markets are looking for progress on trade relations, tariffs and technology issues, while any developments involving energy markets could also influence oil prices and broader risk sentiment.
• Gold is trading lower as rising U.S. Treasury yields increase the opportunity cost of holding the non-yielding asset. The metal is also being affected by a stronger dollar, despite continued geopolitical uncertainty.