Soaring inflation expectations see global stocks fall for third day

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Bond yields surge with 10-year Treasury touching highest level since June 17 as spectre of rate increases grows

An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group’s offices in London, the UK. Picture: BLOOMBERG VIA GETTY IMAGES/LUKE MACGREGOR

The 10-year US Treasury yield hit 1.5444%, its highest level since June 17, pulling up eurozone bond yields in its wake. Two-year Treasury yields surged to 18-month highs. Fed policymakers last week indicated they are ready to raise rates in 2022 and that the bank is likely to begin reducing its monthly bond purchases as soon as November.

London’s FTSE 100 index fell 0.6%, while Germany’s DAX dropped more than 1%. France’s CAC 40 slumped 1.6% and Italy’s FTSE MIB index fell 1.2%.Rising bond yields also boosted the dollar, with the index that measures its strength rising to a five-week high. The Japanese yen fell against the dollar and the euro as rising yields made the currencies more attractive to Japanese buyers.

China’s blue chip index CSI300 edged up 0.1%, as Hong Kong’s Hang Seng index gained 1.34%, snapping a recent run of negative sessions. Still, investors remain on edge over the future of Evergrande, which failed to meet a deadline to make an interest payment to offshore bond holders.

 

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