Written By
Sheikh Hasib Ahmed
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With 30-year rates reaching 5% for the first time since 2007, the selloff in US Treasury securities continued for a third day in a row, plunging the world's financial markets into meltdown.
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The 10-year Treasury yield also increased its proximity to the critical 5% level as belief increased that US interest rates could rise further from their current 22-year highs.
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The MSCI all-country equities index fell for a fourth day in a row as a result, reaching its lowest level since May.
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A day after the S&P 500 index hit a four-month low, European equities recovered early losses to trade little altered, and US index futures were marginally lower.
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Better-than-expected US employment data released on Tuesday and a spate of hawkish remarks from Federal Reserve officials have both contributed to the selloff's most recent leg.
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The possibility of a hike in November is one in three, and the chances of a change in December are greater than 50%.
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According to Guillermo Hernandez Sampere, head of trading at asset management at MPPM, "peak rate hopes vanished into thin air for the moment, triggering the bond selloff.
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"Investors have been driven to sell due to a fear of potential higher rates, and unsurprisingly, the crowd is moving toward a little door.
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The benchmark for the world's cost of capital, ten-year Treasury yields, have increased by around 30 basis points this week. Globally, bonds have followed suit, with rates on Chinese investment-grade dollar credit reaching an 11-month high and Japan's five-year borrowing costs reaching a decade high.
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Additionally, the bond rout's effects have spread to other asset groups. US crude futures fell once more below $89 per barrel, and the dollar's resurgence caused the world's currencies to falter.
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As the dollar reached a record high for the Group of Ten against a basket of peers, rumors of Japanese intervention to support the yen increased.