Higher bond yields cause steep two-day global equity losses

Continued re-pricing of risk assets triggered by higher government bond yields translated into global equities market slump last week. The SP 500 extended losses 4.1% and the Nasdaq composite dipped into correction territory as 10-year Treasury note briefly rose to a seven-year high above 3.25% last week. Both the Dow Jones industrial average and SP 500 logged third straight weekly declines and futures point to lower openings today.

Japan’s NIKKEI Index recorded the steepest decline among the major stock market indices last week. It closed 4.6% lower. Among major currency pairs the biggest change was recorded for the Japanese yen vs US dollar: it slumped 1.5%.

The concern last week’s selloff may mark the start of a bearish turn of US economy is bound to weigh on global market sentiment. This week Federal Reserve’s meeting minutes will be in focus on Tuesday in light of increased financial markets volatility as investors adjust their valuation models after hawkish policy makers’ comments. And on Friday China will release its third quarter GDP report. Economic growth in the second largest global economy is expected to slow as US-China tariff dispute remains unresolved.