It’s still early in the day and even if we are seeing risk trades keep steadier, the overall market mood is more tepid at best. Major indices in Europe are starting the day with just minor losses while S&P 500 futures are seen up 0.2%. It’s not hinting at much though, especially with bond markets globally still being under pressure.
10-year yields in France closed in on the 4% mark once again yesterday and are still up some 26 bps this month to the highest levels since 2009. Meanwhile, 10-year yields in the US continue to push up and are sitting around 4.65% today – the highest since early 2025. Even in Japan, the pressure is on with 10-year yields hovering near 2.80% – the highest in 30 years.
As such, that will continue to apply pressure on the broader market mood if the rout continues. So, the calmer market mood this morning belies the more vulnerable setting in the bigger picture.
The oil market also is seen cooling just a touch with WTI crude down 1% to $103.10 currently.
Looking to the major currencies, the dollar is little changed across the board. There’s not much appetite just yet as we get things going on the session, with traders still weighing up further gains for the dollar amid a more cautious risk environment. That is especially amplified by the bond market selloff with higher yields underpinning the greenback.
EUR/USD is flat near 1.1600 with large option expiries a potential factor, with USD/JPY also flattish near 159.00 as intervention risks remain a key consideration there.
US-Iran developments remain the key risk factor and so far, there’s still no breakthrough on talks. US president Trump delayed a strike against Iran earlier this week but after taunted that he might have to “give Iran another hint” to try and move things along. That headline helped to keep risk trades on edge yesterday and will continue to hang over markets as we get into the new day.
