Bond Market Angst Sours the Market Mood

Stretched AI trade and equity optimism hit the wall of rising rates.

Key Takeaways

• The Bond Market Takes the Wheel: With U.S., U.K., and Japanese yields under pressure, the bond market is pushing back against equity-market optimism and forcing a repricing of global risk appetite. The selloff is not just about central-bank expectations. As the U.K. shows, it also reflects growing concern about fiscal challenges colliding with political uncertainty. All of this comes at a time when central banks must assess whether monetary policy can contain supply-shock-driven pricing risks, even as the latest Fed research shows that the cyclical component of core PCE inflation appears to be trending lower.