Global markets under pressure from bonds as U.S. yields hit highest level since 2002
Global markets entered the final quarter of 2026 amid a fresh wave of volatility after widespread selling of government bonds drove borrowing costs to levels not seen in decades in some major economies, while technology stocks sought to capitalize on strong demand related to artificial intelligence.
Bond yields surge to historic levels
According to Reuters, the yield on 10-year U.S. Treasury bonds rose to its highest level since 2002, while the sell-off spread to bond markets in Britain, France and Japan. In Britain, the yield on 30-year government bonds exceeded 6% for the first time since 1998.
These moves reflect investors’ concerns about persistent inflationary pressures and rising financing costs, alongside worries about governments’ fiscal trajectories and large debt issuances.
European stocks begin the final quarter lower
European stocks opened lower on Thursday as investors shied away from risk. Reuters reported that the European Stoxx 600 index came under pressure as global yields rose, although the technology sector remained in focus after strong results in the chip industry.
In Asia, South Korean stocks rose by around 2%, driven by record chip exports, reflecting the current divide in markets between optimism related to artificial intelligence and concern over rising interest rates and yields.
What does this mean for investors?
Higher bond yields raise the risk-free rate against which investors compare stock valuations, and can therefore put particular pressure on companies with high valuations. Rising borrowing costs could also gradually affect corporate financing and investment demand.
The divergent moves in stocks and bonds indicate that markets are entering the final quarter with heightened sensitivity to inflation and growth data and central bank statements. Chip and artificial intelligence stocks remain a source of support, but face a test from the continued rise in yields.
Sources
Reuters: Reports on global markets, bonds and European stocks published on October 1, 2026.
