This week, U.S. Treasury yields surged to multi-decade highs before pulling back on Thursday. Rising energy prices, inflation concerns, and uncertainty surrounding interest rates have led to declines in Asian markets, including China, Japan, Taiwan, and South Korea. For instance, the iShares MSCI China ETF (MCHI) dropped nearly 1% during a shortened week, which runs until October 8 for the Mid-Autumn Golden Week holidays. Overall, global stock markets are trending downward due to the pressure of increasing bond yields.
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All three major U.S. indexes are expected to end the week lower, but the technology-heavy Nasdaq is projected to experience the least decline. The Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, has notably performed better than the broader market, aided by strong performances in key technology stocks and the AI sector. Notable chip manufacturers such as Nvidia Corp. (NVDA), Micron Technology (MU), and Intel Corp. (INTC) are likely to finish the week in the green.
In contrast, the SPDR S&P 500 ETF Trust (SPY) and the SPDR Dow Jones Industrial Average ETF (DIA) are on track for losses this week as they grapple with the implications of rising bond yields and inflation. At the close of trading on Thursday, the 10-year U.S. Treasury yield was at 5.256%, having reached a peak of 5.34% earlier, while the 30-year Treasury yield stood at 5.633%.
Among Asian markets, the iShares MSCI Taiwan ETF (EWT) experienced the largest decline, falling nearly 2% this week. Other Asian ETFs, including the iShares MSCI Japan ETF (EWJ) and iShares MSCI South Korea ETF (EWY), are also expected to close lower. The global bond market has seen significant selloffs this week, resulting in the highest U.S. Treasury yields since 2002 for the 10-year bond and the highest for the 30-year bond in 24 years before both retracted on Thursday.