Key Takeaways
- US 10-year Treasury yield hits 19-year high, spiking to over 5.27%.
- Nvidia's buyback plan fails to prevent Nasdaq from falling 0.9%.
- Asian markets, including Japan and South Korea, experience declines.
Asian equities faced significant pressure on Tuesday as bond yields surged to their highest levels in years, driven by a combination of rising oil prices and anticipated interest rate hikes in key economies.
The 10-year US Treasury yield reached a 19-year high of over 5.27%, marking the heaviest monthly selloff in two years, with a rise of nearly 50 basis points through September.
The US 2-year yield also moved significantly, increasing more than 57 basis points this month to reach the threshold of 5%, reflecting expectations of three more Federal Reserve rate hikes by mid-next year.
These higher yields have a direct impact on global markets, serving as a reference for riskier investments and influencing mortgage and corporate borrowing costs.
In Asia, bond markets in Japan, South Korea, and Australia traded under pressure, leading to declines in most regional equity markets.
The Nasdaq, which saw a massive $150 billion boost from Nvidia's buyback plan, still fell 0.9% due to the overall market sentiment.
The blue chip CSI300 index in China, already hit on Monday by US plans to ban Chinese components from data centres, remained pinned to a one-year low.
The Australian dollar held steady at $0.7012, with the Reserve Bank of Australia expected to hike rates again by February.
Despite the challenges, the Australian dollar's stability was attributed to the fully priced rate hike, though some analysts questioned the governor's ability to meet market expectations.
