There is no letup in the market turmoil that gripped investors yesterday, as government borrowing costs around the world hit their highest level in years.
Shares are sliding in Asia Pacific markets today, as renewed clashes between the US and Iran drive up the oil price.
In Tokyo the Nikkei 225 share index has slumped by 2.7% today. China’s markets are in the red, too, with the CSI 300 losing 1.4%, while South Korea’s Kospi has dropped by 3.3%.
Last night, Wall Street ended lower, too – with the Russell 2000 index of smaller US companies dropping by 1.2%.
This follows a day of bond market turmoil on Tuesday, during which the UK’s long-term borrowing costs jumped to their highest level since early 1998, while Japan’s 10-year bond yield hit its highest level since 1996.
Sovereign bond yields appear to be being pushed up by three factors – worries about rising inflation, concerns about government spending levels and competition with AI companies who are also borrowing heavily.
Rising bond yields push up a government’s borrowing costs – and risk eating into the new UK chancellor’s fiscal headroom, making it harder to afford new spending pledges in the October budget.
The bond sell-off has hit India today.
The yield on Indian 10-year government bonds briefly hit 7%, for the first time in three months, Reuters reports.
Oil has hit its highest level in almost six weeks after the US and Iran exchanged airstrikes.
Brent crude traded as high as $97 a barrel, for the first time since 24 July, having jumped by 4.6% yesterday.
That risks adding to the inflationary pressures that have been pushing bond yields higher.
Today’s key events
• 9.30am BST: ONS Mergers and Acquisitions involving UK companies – April to June 2026
• Noon BST: US mortgage application data
We’ll be tracking all the main events throughout the day on our business live blog …
