Bond yields jump, oil extends gains as US-Iran ceasefire expires

On Tuesday, bond yields surged to their highest levels in decades, while oil prices continued to rise for the third consecutive day, causing stocks to lose early gains in Asian markets as the US-Iran ceasefire expired and Iran threatened to adopt a fully offensive military posture. The yield on the US 30-year Treasury bond reached an intraday high of 5.321 percent, its highest in almost 20 years, while the 10-year bond increased by 0.4 basis points to 4.724 percent.

Typically, a 10-year yield surpassing 4.65 percent has been followed by positive statements from the Trump administration regarding an imminent resolution to the war with Iran. However, this time, no such reassurances were forthcoming, as the shaky 60-day truce came to an end. The S&P 500 e-mini futures fell 0.2 percent, and MSCI's broadest index of Asia-Pacific shares outside Japan declined 0.3 percent, reversing early gains due to losses in Taiwan and China's stocks.

South Korea's KOSPI recovered an initial 3 percent gain but traded flat after a holiday, while the Nikkei 225 slipped 1.6 percent. Brent crude futures rose 0.4 percent to $91.20 a barrel, as the rally in oil prices persisted for a third consecutive day. Analysts noted that the increase and persistence in longer-end developed market yields were a major focus in global macroeconomic trends, with the yield on the 10-year Japanese government bond reaching a three-decade high of 2.94 percent.

Overnight on Wall Street, the S&P 500 declined 0.5 percent, and the Nasdaq Composite edged 0.3 percent lower as US economic data, including an unexpected drop in retail sales, prompted traders to reduce expectations of an imminent Federal Reserve interest rate move. The US dollar index, which measures the greenback's strength against a basket of six currencies, increased by 0.1 percent to 99.60, pulling back from a two-month low.

Gold experienced a 0.3 percent drop, settling at $4,402.89, ending a two-day winning streak. In the cryptocurrency market, Bitcoin and Ether both experienced a 0.3 percent decline, trading at $64,159.76 and $1,899.34, respectively.