Markets Near Tipping Point as Bond Yields Surge; Geopolitical Developments Unfold

Hello, this is Leonie Kidd writing to you from London. Welcome to today's edition of the Daily Open newsletter.

Are markets close to a tipping point?

The pressure in the bond market — which is driving some yields to multi-decade highs — is creeping into equity trading, with back-to-back losses for major global indices.

So far, equities seem to have absorbed the impact of rising yields, but is that changing?

The sell-off in government bonds has intensified, with the moves triggering declines across stock markets in the U.S., Europe and Asia.

On Tuesday, the 30-year Treasury yield peaked at 5.19%, the highest level in nearly 19 years. The 10-year yield hit 4.687%, a level not seen since January 2025.

"U.S. Treasuries are now firmly in the Danger Zone – the level of 10Y UST that tends to put pressure on virtually all asset classes," HSBC strategists wrote in a note late Tuesday, warning that further repricing in terminal rate expectations could drive yields "even further into the Danger Zone, likely leading risk assets temporarily lower."

Rising bond yields have kept the pressure on stocks, with the S&P 500 and Nasdaq logging their third consecutive session in the red on Tuesday. Asia-Pacific equities are in the red, led lower by Japan's Nikkei 225 and South Korea's Kospi , while European futures are pointing to a negative open.

In geopolitical developments, Russian President Vladimir Putin has invited Chinese President Xi Jinping to visit Russia next year. During their two-day meeting in Beijing, Xi said relations with Moscow were built on "deep political mutual trust and strategic cooperation." Putin said ties between the two nations were at "unprecedented levels."

In the U.S., the Senate has advanced a resolution to halt military action in Iran, following a surprise defection from a Republican Senator. However, the preliminary vote would need to pass a final Senate vote, clear the House, and avoid being vetoed by President Donald Trump to become law.

Corporate newsflow looks set to be dominated by the technology sector today.

Nvidia will report earnings after Wall Street's closing bell on Wednesday, with investors focused on how the AI darling's infrastructure buildout is progressing. The group has also revealed plans to open a new research center in Singapore, its second presence in Asia Pacific. The city is in demand, with OpenAI and Google also committing to expanding their AI hubs and deployment.

— Leonie Kidd