Global financial markets faced pressure on Thursday, with government bond yields surging, stocks declining, and the U.S. dollar holding near a year-high. UK gilts saw significant selloffs, driving yields to 16.5-year highs, as concerns about inflation, fiscal stability, and reduced chances of interest rate cuts weighed on sentiment. The pound dropped 0.6% to $1.229, nearing its lowest since November 2023.
The U.S. 10-year Treasury yield hit a peak of 4.73% before easing slightly, influenced by signs of U.S. economic resilience and concerns over Federal Reserve rate cuts. Minutes from the Fed’s December meeting highlighted inflation risks from proposed policies under President-elect Trump. Markets now anticipate only one Fed rate cut in 2025, with a 60% chance of a second.
Asian and European equities declined amid global uncertainty. Chinese stocks fell 0.3%, reflecting persistent deflationary pressures despite government stimulus, while Japan’s Nikkei slid nearly 1% on profit-taking. In Europe, stock markets steadied, with the FTSE 250 down 0.3%.
Commodity markets also felt the impact. Brent crude dipped to $76.05 a barrel, pressured by dollar strength and inventory builds, while gold steadied at $2,663 an ounce. Bitcoin hovered around $93,432 after a recent 7% decline. Meanwhile, China’s yuan steadied near a 16-month low, bolstered by central bank measures to support currency stability.