Global equities are showing resilience despite a difficult month for bond markets. September is on track to become one of the weakest months for global bonds in years, while major equity markets have remained relatively stable, supported by solid corporate earnings, resilient economic activity and continued enthusiasm around artificial intelligence.

U.S. stocks closed slightly lower on Tuesday as long-term Treasury yields continued to rise. The Dow Jones fell 0.26%, the S&P 500 declined 0.17% and the Nasdaq slipped 0.09%. The Nasdaq remains particularly sensitive to higher borrowing costs following its strong performance earlier in the year.

U.S. Treasury yields remain at multi-year highs. The 10-year yield reached around 5.29%, while the 30-year yield climbed above 5.6%, its highest level since 2002. Higher long-term yields are increasing financing costs and putting pressure on equity valuations, particularly across growth and technology stocks.

Asian markets are relatively mixed as investors assess the impact of higher global borrowing costs. Japan’s Nikkei has remained broadly stable over September, while the Kospi has gained around 1.4% for the month. The Japanese yen has also stabilized after recent weakness as markets remain alert to the possibility of official intervention.

OIL, GOLD & GEOPOLITICAL RISKS REMAIN IN FOCUS

 Oil prices are easing after a sharp rise earlier in the month. Brent crude fell around 2.8% on Tuesday to approximately $102 per barrel, while WTI dropped below $90 as Saudi Arabia resumed exports through its East-West pipeline. Signs of improving Middle Eastern supply are helping reduce some immediate pressure on energy markets.

• Despite the recent pullback, oil prices remain significantly above pre-conflict levels, keeping inflation risks elevated. Energy costs remain an important factor for central banks as investors assess whether higher oil prices could keep inflation above target for longer.
• Gold prices are stabilizing after their recent decline. Spot gold is trading around $4,180 per ounce as easing oil prices and slightly lower expectations for an immediate Federal Reserve rate hike provide some support. However, elevated Treasury yields and a stronger dollar continue to limit upside momentum.
• Markets are now turning toward upcoming U.S. inflation and labor-market data for clues on the Federal Reserve’s next move. Recent comments from New York Fed President John Williams have reduced expectations for an immediate October rate hike, while investors continue to monitor the interaction between inflation, energy prices and elevated bond yields.