Benchmark borrowing costs around the world jumped on Wednesday as investors continue to adjust to the prospect that interest rates are likely to stay higher for longer.
The yield on the 30-year US Treasury bond briefly exceeded 5 percent, while the yield on the 10-year Treasury bond was around 4.8% – the highest level since August 2007. The yield on the 10-year federal bond in Germany briefly reached the 3 percent mark, for the first time in 12 years.
The rapid rise in interest rates in recent weeks is increasingly spreading to other financial markets and reducing the attractiveness of riskier investments such as stocks. The S&P 500 closed Tuesday at its lowest level since early June, after falling 1.4%.
Stock futures fluctuated. Contracts tied to the S&P 500, the Dow Industrials and the Nasdaq-100 each rose about 0.1%.
Oil prices fell. West Texas Intermediate, the U.S. benchmark, fell below $88 a barrel. Brent crude, the international benchmark, traded below $90.
Asian stocks fell. Japan’s Nikkei 225 and South Korea’s Kospi both fell more than 2%. Hong Kong’s Hang Seng hit a new low for 2023 for the second day in a row.
The Cboe Volatility Index, known as Wall Street’s fear indicator, was around 20. A VIX reading above 20 typically indicates increasing fear among investors.
There are a number of US economic data coming up. The ADP employment report is due at 8:15 a.m. ET. Shortly after the opening bell, data on service activity and factory orders will arrive.
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