Asian stocks, bonds to slide as Wall Street gears up for Trump-Xi summit
Published Thu, Sep 24, 2026 · 12:53 PM
STOCKS and bonds in Asia were set to decline Thursday (Sep 24), tracking Wall Street losses as an oil rally and stronger-than-expected US economic data fuelled inflation concerns and bets on further interest rate hikes.
The yen, near a three-week low, will be in focus as Japanese markets reopen.
New Zealand government bonds fell in early Asian trading, while Australian bond futures pointed to losses, following the sell-off in Treasuries.
Equity-index futures for Hong Kong and Australia pointed lower, with US equity futures little changed after the S&P 500 fell 0.8 per cent and the Nasdaq 100 dropped 0.9 per cent on Wednesday. South Korean markets were closed.
US oil rose in early trading after Brent crude jumped 3.9 per cent to settle at US$103.08 a barrel. On Wednesday, 10-year Treasury yields surged 15 basis points to 5.11 per cent, the biggest one-day increase since the market turmoil triggered by US President Donald Trump’s April 2025 tariff rollout.
The sell-off deepened after a weak US$70 billion sale of five-year notes, pushing the yield above 5 per cent for the first time since 2007, while the US dollar strengthened against all major currencies.
The prospect of higher energy costs colliding with a still-strong US economy is likely to keep pressure on bonds and equities as investors reassess how far the US Federal Reserve may need to tighten policy.
Traders have ramped up bets on further rate hikes, placing upcoming inflation and labour market data firmly in the spotlight.
“This is the market telling us we have entered a genuine re-tightening cycle,” said Tony Miano at Wells Fargo Investment Institute.
“The entire curve is repricing at once, which means higher discount rates for equities, higher mortgage and corporate borrowing costs, and a higher bar for risk assets.”
Earlier, data showed US mortgage rates climbed to a more than two-year high, while the S&P Global flash US composite purchasing managers index rose in September to its highest since July 2021, signalling faster growth in business activity.
The stronger economic data and jump in oil prices amid the Middle East standoff prompted traders to add to bets on further Fed tightening.
Officials raised borrowing costs last week for the first time in three years, to a range of 3.75 to 4 per cent, a move chairman Kevin Warsh said removed a “dose of accommodation”.
Swaps now fully reflect three quarter-point hikes over the next year, with significant hedging for a fourth. If realised, that would take the central bank’s target rate into a range of 4.75 to 5 per cent.
“You do not want to step in front of the freight train today,” said Sean Simko, head of fixed-income investment management at SEI Investments.
“You are seeing the trifecta – stronger economic data, supply pushing the five-year to levels we have not seen in years and the view that inflation is sticky globally.”
Traders were also monitoring geopolitical developments. Iranian President Masoud Pezeshkian said his country will not allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place, underscoring the hurdles to a peace deal despite efforts to revive talks.
In other commodities, gold fell as much as 2 per cent to around US$4,275 an ounce on Wednesday as bond yields climbed. Higher rates typically weigh on bullion because it pays no interest.
Wall Street is also gearing up for a summit between Trump and Chinese President Xi Jinping in Washington on Thursday, followed by a dinner with US corporate leaders. Trump told reporters last week that he expected to secure “a lot of different deals” during the event. BLOOMBERG
