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The week in Global Markets
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AI-linked markets moved from renewed optimism after a major IPO filing to a broad repricing as earnings failed to justify infrastructure spending. The selloff spread across Asian technology markets, semiconductors, software, megacaps, and the wider growth trade, while investors favored stronger cash generation.
The Federal Reserve held rates but opened the door to renewed tightening as strong growth and inflation reduced the case for quick easing. Canada resumed increases and Japan signaled active normalization, broadening the pressure on currencies, bonds, housing, and growth assets.
China posted stronger headline growth and profit data, but uneven domestic demand and retreating private investors kept authorities involved in equities and liquidity. Rising yuan expectations and renewed stress in Chinese high-yield credit added competing pressures for policymakers.
Foreign demand for Treasuries weakened as investors saw less political relief for US deficits, while the Treasury prepared to change its issuance guidance. The resulting supply and fiscal uncertainty tied borrowing costs more closely to global risk appetite, even as a technology selloff briefly drove investors into government bonds.
Crude initially fell as diplomacy reduced immediate risk premiums, but persistent attacks and later Iran escalation concerns pushed prices sharply higher. The reversal left shipping, transport costs, inflation, and central-bank policy exposed to renewed disruption.
Credit access increasingly depended on issuer quality as strong borrowers attracted demand while weaker companies postponed offerings or faced tighter terms. Property refinancing pressure, patchwork corporate liquidity measures, and worsening junk-debt protections showed the strain moving beyond equities.
Gold weakened as a firmer dollar and rising rate expectations increased the cost of holding the non-yielding asset. Even renewed geopolitical concerns failed to prevent a sharp decline, though buyers returned near the one-year low as oil prices eased.
Brazil’s currency suffered an historic selloff as investors focused on expected spending and deteriorating fiscal credibility. The rout raised the country’s risk premium and borrowing costs while narrowing the government’s room to restore confidence.
Day’s Recap