Asian Stocks Wobble as Bond Yields Surge to 19-Year High

The Asian stock markets wobbled on Tuesday as bond yields soared to their highest level in nearly two decades. The benchmark 10-year US Treasury yield rose above 5.27%, a 50-basis-point increase from September, while the 2-year yield shot up over 57 basis points this month to reach the threshold of 5%.

The surge in yields is driven by traders' expectations that the Federal Reserve will hike interest rates three more times by mid-next year due to strong US growth and inflation. This trend has put pressure on bond markets in Japan, South Korea, and Australia, causing most regional equity markets to slip in early trade.

Angus Hui, head of fixed income at Fullerton Fund Management in Singapore, said that the market is entering a new environment where interest expenses are increasing as part of government budgets, which may limit bond recovery if the global economy slows down. He also noted that bond yields are unlikely to return to their previous lows.

The fragile sentiment in China's technology sector, following US plans to ban Chinese components from data centers, left the blue-chip CSI300 index at a one-year low. Meanwhile, oil prices continued to rise, with Brent crude futures reaching $106.60 per barrel.