Premarket: Stocks slide, yields up on ‘higher for longer’ rates view

Global stocks dipped on Tuesday, while bond yields and the dollar traded near multi-month highs as investors reined in expectations for more big U.S. interest rate cuts ahead of the U.S. election.

“We’re getting very close to the U.S. election and the data in the U.S. has been strong. So there is a question about how much the Fed can do,” said Peter Schaffrik, global macro strategist at RBC Capital Markets. Adding to the uncertainty was the looming U.S. election, where former Republican president Donald Trump and Democrat Vice President Kamala Harris are caught in a tight battle to win over some of the more competitive states ahead of the Nov. 5 voting day.

Benchmark 10-year Treasury yields rose 2 basis points to 4.21%, extending a sharp move higher and hitting their highest since late July. “It’s a small capital flight out of Japan,” said Naka Matsuzawa, Japan macro strategist at Nomura. More broadly, he said, markets were starting to speculate on a “red sweep,” delivering Republicans the White House and Congress in November.

China’s markets were pinned well below recent highs, while traders wait for more details and especially more government urgency and spending to support the ailing economy.

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