Tensions on the markets seem to be easing this morning, along with a modest drop in oil prices thanks to glimpses of agreements between USA and Iran, while the lack of concrete announcements from the meeting between Trump and Xi JinpingBut investors are especially worried about the levels reached by government bond yields which will also end up impacting the financing costs of businesses and families. Norges Bank Norway surprised everyone with a rate hike. In Asia, mostly closed for holidays, the Nikkei Japanese is on the rise.
Brent fell 0,8% to around $105,70 per barrel, After a surge of more than 7% in the previous two sessions, US and Iranian negotiators explored a gradual agreement that would include Tehran reopening the Strait of Hormuz and Washington lifting its blockade of Iranian ports. The dollar continues to strengthen, while the euro is at a two-month low.
Government bond yields hit multi-decade highs
Pressure on the bond market appears to be easing this morning, but the trend is still worrying. The yield on the U.S. benchmark bond 10 yearsAfter breaking the 5% barrier, it continued to rise, reaching a new 19-year high of 5,2251% overnight, before falling back to 5,19% in Asia. This represents a gain of nearly 20 basis points in two days, a move similar to what was last seen when Trump's tariffs on Liberation Day sent markets into a tailspin. This time, however, no such trigger is apparent.
The very long-term bond market has done even more. Yields thirty years They jumped 16 basis points to 5,5016%, the highest level since 2004. When Treasury Secretary Bessent intervened a month ago with buybacks, it was to defend the 5,3% level. The latest bond buyback, which took place overnight, proved a fiasco, reaching only $4 billion of the planned $6 billion.
The movement has spread to other markets around the world. In Asia, yields on Japanese government bonds have soared to levels not seen since 1996 and bond yields Australian decennials They're on the verge of hitting a new 15-year high. And the consequences will soon be felt. Governments face higher borrowing costs to finance their growing deficits, AI giants must justify their ever-increasing spending plans, and households are facing higher mortgage costs, resulting in higher home purchase prices.
Rising yields will eventually lead to a tightening of monetary policy. For now, futures continue to price in a 70% probability of a further rate hike by the Federal Reserve next month. Meanwhile, Norges Bank Norway surprised everyone with a rate increase , Swedish Riksbank has signaled that it will likely follow suit by the end of the year.
Much smoke and mirrors from the US-China summit
While expectations were very high, the markets are disappointed by the fact that, so far, they have detected a lot of smoke but little fire. “President Trump and I have had sincere and in-depth exchanges, reaching acommon understanding on many issuesThis has enriched the site with new content. constructive relationship e strategic stability between China and the United States, while providing a new orientation for our relations." The Chinese president said this Xi Jinping, speaking at the state dinner in his honor at the White House. "China and the US must act as responsible great powers: responding to the expectations of their respective peoples, moving with the times, and exploring a new model of coexistence between great nations," he added.
Xi Jinping also urged his American counterpart to support the United States and Iran's return to "the terms of the memorandum of understanding" signed in June, which called for a cessation of hostilities, the reopening of the Strait of Hormuz, and the lifting of the U.S. naval blockade, while also initiating negotiations for a more lasting peace. This was reported by China's state-run news agency. Xinhua.
Wall Street mostly fell yesterday. AI stocks were mixed.
The S&P 500 closed slightly lower yesterday as uncertainty over the Middle East pushed oil prices higher towards $107 and Treasury yields to their highest since 2007. The S&P 500 closed down 0,02%, the Nasdaq up 0,01%, and the Dow down 0,31%.
The S&P 500 and Nasdaq recovered from session lows after Reuters reported that U.S. and Iranian negotiators were considering a phased exit from the war, which would include Tehran reopening the Strait of Hormuz and lifting Washington's economic blockade of Iran.
The megacaps of theIA they had mixed reactions. ecosystem closed down 0,5% and Broadcom of 1,3%, while Advanced Micro Devices rose 2,4%. Meta Platform rose 4,5%, a day after the social media company unveiled a small, portable device for use with its recently launched AI assistant.
Asia mostly closed for holidays. Tokyo rises 1,2%. The euro loses strength.
As tensions eased, the MSCI Asia Pacific stock index rose 0,3%, with the Japan leading the rises with a +1,2%, while the markets South Korea, Taiwan, and mainland China are closed for holidaysHong Kong's Hang Seng Index fell 1%.
Lo yen strengthened against the dollar after Finance Minister Satsuki Katayama commented that U.S. President Donald Trump shared concerns about the weakness of the Japanese currency. The currency gained 0,3% to 158,40 per dollar. dollar was on track to post its first consecutive weekly gains in more than three months, thanks to rising Treasury yields and growing expectations of further rate hikes by the Federal Reserve, keeping the greenback near multi-monthly maximumsThe strength of the dollar has pushed theEuro hits two-month low of $1,1370, setting it on course for a third consecutive week of decline, its worst losing streak since late 2025. GBP settled near a three-month low of $1,3220 and was on track for its worst weekly performance in four months.'gold remained around $4.270 an ounce.
European stock markets are expected to open higher. At the Milan Stock Exchange, eyes are on Fincantieri, Leonardo, and Stellantis.
European stock markets are expected to open slightly lower this morning, based on Eurostoxx 50 futures trading at +0,9%.
AvioAdvent International has closed the subscription of the reserved capital increase for 109,4 million, reaching a 6,54% stake, becoming the second largest shareholder.
Bank Bpm. According to the media, a joint initiative by Unicredit and Crédit Agricole is a possibility, but nothing has been decided.
EniHSBC raised its target price to €25,50, from €24. Its hold rating is confirmed.
Getting very. It has signed a Power Purchase Agreement with Glencore for the supply of over 800 GWh in Poland.
Fincantieri / Leonardo. Orizzonte Sistemi Navali (Fincantieri 51%, Leonardo 49%) has signed a contract with OCCAR worth approximately €3,7 billion for the development, production, and logistics studies of two next-generation DDX destroyers for the Italian Navy. In the coming weeks, OCCAR will sign subcontracting agreements with Fincantieri and Leonardo, worth approximately €1,8 billion and €1,7 billion, respectively.
Italian Post Office, Telecom Italia. On the eve of the closing of the takeover bid, Poste holds 75,6% of TIM's capital, below the 90% threshold required for delisting.
StellantisCox Automotive expects Stellantis U.S. sales to decline 1% in the third quarter.
