US yields are now rising for all the wrong reason

Asian equities slumped, mirroring the turbulence on Wall Street. A cocktail of worries about China’s economic outlook and a contentious U.S. presidential election weighed heavily on market sentiment. Big tech, the linchpin of many global portfolios, wasn’t spared, as the Nasdaq 100 tumbled nearly 2%, delivering a gut punch to investors. Apple, the tech titan, saw pressure, but the real shock came from U.S. Treasury yields tearing higher, leaving investors on edge.

The bond market is on fire. Ten-year Treasury yields have surged past 4.25%, slicing through the 200-day moving average. Wednesday’s disappointing 20-year auction only fueled the flames, exacerbating the bond selloff and rattling nerves across the market.

We’re now looking at a 70-basis-point surge in 10-year yields since their September lows, a move that’s way “too much, too soon” for an equity market already straining under sky-high valuations.

The problem is that US yields are rising for all the wrong reasons. The market is increasingly pricing for a “red sweep,” with bonds reacting to a potential Trump victory alongside a Congress eager to greenlight his inflationary playbook. Picture this: tariffs on the rise, fiscal belts loosening, and immigration controls tightening—setting the stage for inflation to roar and wages to skyrocket.

Bond volatility? It’s through the roof. The MOVE index has skyrocketed to 130, a level unseen since late 2023. The bond market is teetering on a razor’s edge, and the impending election only adds fuel to the fire.

Hold on tight—this ride’s just getting started.