Stock market sentiment

Experts warn of continued rate rally: "Toxic cocktail"

Inflation concerns have pushed the yield on the 10-year US Treasury note to its highest level since 2007—and experts see a risk of further increases, Bloomberg reports.

Westpac chief strategist Martin Whetton believes that tomorrow's expected US benchmark interest rate hike and continuing rises in oil prices are pushing yields even higher. Current levels around 5 percent "should be viewed as the new normal."

ING’s head of research, Padhraic Garvey, is also raising a red flag.

"Could it get even worse? Yes," he says, adding that a move from 5 to 6 percent would be difficult for the market to handle.

SEB senior economist Robert Bergqvist sees both increased inflation risks and growing uncertainty regarding how the Fed will act.

"So, it’s quite a toxic cocktail we have right now," he tells EFN.

Key US yield surpasses financial crisis levels

The yield on the 10-year US Treasury note climbed above 5 percent on Monday for the first time since 2023. On Tuesday morning, the key market yield continued to rise, reaching its highest level since 2007, CNBC reports.

Creditsights chief strategist Zach Griffiths believes it could rise toward 5.5 percent.

"There are many underlying factors suggesting the bond sell-off will continue and yields will rise," he tells Bloomberg. One factor is the rally in oil prices, with Brent crude rising 18 percent in September alone. This has fueled inflation concerns and led the market to price in a Federal Reserve rate hike tomorrow with a probability of nearly 94 percent.

Rising interest rates are putting pressure on global stock markets, which are simultaneously weighed down by renewed concerns regarding AI, following calls from AI giants to slow down development.