Global Market Report: Bond Yield Regime Change and Risk Asset Volatility

Thursday, September 24, 2026 | Daily briefing on bond yield regime changes, inflation fears, energy risks, and crypto’s rate-driven correction.

Summary of the Day

Our View: A regime change occurred in the bond market last night: the five-year yield surpassed 5% for the first time since 2007, and the 10-year yield climbed to 5.11%, pulling the rug out from under this week’s equity rally. Today, we expect selling pressure in risk assets to persist, the dollar to remain strong above 101, and rising yields to hit leveraged and zero-yield assets the hardest. Crypto could test around 80,000, with Friday’s $14 billion options expiry magnifying the move. Two-way risks in oil are high: Iran says it is open to diplomacy, but there is no backpedaling on Strait of Hormuz terms, while diesel ban discussions alone can drive prices. Today, US jobless claims and Fed speakers provide the next test for rate pricing.

• The five-year yield crossed 5% for the first time since 2007. A $70 billion auction saw weak demand and sold at 5.033%, the highest auction yield since 2006. The 10-year rose 15 basis points in a single day to 5.11%, and the 30-year climbed to 5.40%.
• US preliminary PMI hits a five-year high. The S&P Global composite index rose to 58.4, the highest level since July 2021, heightening concerns that the economy is showing signs of overheating. The probability of an October rate hike approached 70%, up from 50% a week ago.
• Japan’s 10-year yield hits its highest since August 1996 at 3.06%. Returning from a three-day holiday, Tokyo followed the US sell-off, with the 30-year yield hitting 4.12%. The Nikkei rose 1.2%–1.7% on a weak yen, while the rest of Asia remained in negative territory.
• Trump and Xi are in Washington. Bessent announced that the two countries agreed to extend the trade truce by two months. Expectations for Boeing orders have weakened; Taiwan, Iran, and artificial intelligence are on the agenda.
• Iran is open to diplomacy, but there is no retreat on Hormuz conditions. Pezeshkian said at the UN that they will not surrender; security chief Rezaei stated that the strait will not open unless conditions are met. Brent crude retreated to 102.2 this morning after jumping 4% on Wednesday to approach $104.
• The diesel ban caused confusion. Following Politico’s report on preparations for a 90-day ban, diesel futures fell 5% intraday. The White House denied the report, and Energy Minister Wright stated that a ban would not work. Diesel is at record highs in the US.
• Bitcoin dropped below 84,000, and Dogecoin fell 7%–8%. The surge in the 10-year yield hit zero-yield assets. Despite this, $347 million flowed into ETFs on Wednesday, marking the fifth consecutive day of inflows. Friday brings approximately $14 billion in options expiries on Deribit.
• Today: US jobless claims (consensus 201K) and new home sales; Germany’s Ifo, French business confidence, UK consumer confidence; Fed’s Williams and Hammack speak.

Story of the Day: Regime Change in the Bond Market

On Wednesday, three developments occurred back-to-back, collectively reversing this week’s market narrative. First, Brent surged over 4% to approach $104, ending a six-session losing streak and removing the primary factor alleviating inflation concerns. Next, S&P Global’s US preliminary survey was released: the composite index hit 58.4, the highest since July 2021, and manufacturing grew at its fastest pace in over five years. Finally, the Treasury’s $70 billion five-year note auction saw weak demand, selling at 5.033%—the highest auction yield since 2006 and roughly 3 basis points above the pre-sale market price, meaning buyers demanded extra yield to absorb the debt. Consequently, the five-year yield crossed 5% for the first time since 2007, the 10-year jumped 15 bps in a single day to 5.11%, and the 30-year reached 5.40%.

The impact spilled over into Asia: upon returning from a three-day holiday, Tokyo saw Japan’s 10-year yield rise 8 bps to 3.06%, its highest level since August 1996, with the 30-year hitting 4.12%.

The Fed front did not soften this picture. Governor Michael Barr stated on Wednesday that last week’s hike was part of an effort to recalibrate borrowing costs and that further increases may be needed; the market read this as forward guidance. Futures price in nearly a 70% probability of a second hike in October, up from 50% a week ago. Chris Weston from Pepperstone summarizes the landscape: the relative strength of US growth and increasingly aggressive Fed pricing continue to make holding the dollar attractive; signs that the economy may be overheating are now in focus, and if inflation keeps surprising to the upside, policymakers may need to tighten further. Ray Attrill from National Australia Bank points to the impact on equities: stocks are showing signs of cracking under the weight of relentlessly rising bond yields, and in such a risk-off environment, the dollar still finds safe-haven support. Today, New York Fed President Williams and Cleveland Fed President Hammack will speak, alongside the release of jobless claims (consensus 201K) and new home sales.

Is “6% the New 5%?”

For years, a 5% yield on the US 10-year Treasury was viewed as the threshold where global markets would plunge into turbulence. Surpassing this level this month has left investors wrestling with an uncomfortable question: Is the new figure that should keep them awake at night 6%? Mike Bell from BlueBay Asset Management notes that the threshold was never an automatic trigger, but rather a psychological marker: people think as if there is a magic number, whereas it is relative rather than absolute. The key is comparing bond yields with other fundamental investment metrics, particularly the earnings yield of equities, and according to Bell, this relationship is now approaching a turning point, which could set the stage for an equity sell-off. History serves as a warning: the MSCI World Equity Index lost half its value the last time the 10-year yield broke 5%—right before the global financial crisis; a decade prior, a spike near 6.8% helped trigger the dot-com bubble burst.

The counter-argument is structural. According to JPMorgan analysts, the pain point is higher this time due to a fundamental structural shift in the global economy: artificial intelligence, healthcare, and services play a larger role, and many of these companies continue to spend and grow regardless of the level of borrowing costs. This implies that the traditional interest rate channel appears “materially less binding,” and the break threshold for stock markets could be “meaningfully higher, potentially in the 5.5%–6.0% range.” A shift from 5% to 6% in the $29 trillion Treasury market would represent a radical correction in the global cost of capital—driven either by significantly higher inflation expectations, growing concerns over US fiscal sustainability, the conviction that rates will remain high for years, or a mix of all three.

Paul Jackson from Invesco offers a concrete metric: according to his calculations, global equities decline when the 10-year yield begins rising after trading at an average of 4.72% for 12 months. This tipping point is distant for now, with the 12-month average sitting around 4.34%, but Jackson notes he is nevertheless reducing equity exposure and shifting a portion into government bonds. Emerging markets are among the first victims of such spikes: last week saw the largest outflows from emerging market bond funds in months. Neil Birrell from Premier Miton highlights the core risk: markets look fine right now because investors have not yet incorporated yields above 5% into their long-term profit models. They look fine until everyone reruns their valuation models, but numbers are numbers and eventually surface.

Diplomacy Takes a Backseat

Washington put on a good visual show: Trump, accompanied by a marching band, cannon salutes, and a 100-foot red carpet, welcomed Xi Jinping on his first US visit in three years. Bessent announced that the two countries agreed to extend the 11-month trade truce by two months, marking the concrete outcome of the summit. Taiwan, Iran, and AI were on the agenda, but expectations for a new commitment from China to purchase Boeing aircraft softened. The market did not expect a major breakthrough, and the truce extension aligns with that expectation.

On the Iranian front, there is no progress. Pezeshkian stated at the UN General Assembly that Tehran will never surrender to US pressure; security chief Mohsen Rezaei stated that the Strait of Hormuz will not open unless conditions are met. A senior Iranian official told Reuters that the two sides remain divided on how to end the war, but diplomacy must continue, with Tehran reviewing Washington’s peace proposals; Iran’s primary priority is the removal of the US naval blockade and the reopening of the strait. Secretary of State Marco Rubio said an agreement with Iran would require tough, time-consuming work and that Trump retains military options. On the Ukrainian front, Zelenskyy warned of a difficult winter, and Russia continued attacks on Kyiv.

Trump’s 1% Rate Demand and the Warsh Distinction

After the Fed raised rates to the 3.75%–4.00% range last week, Trump criticized the decision and reiterated his demand for a 1% interest rate. Analysts view this demand as unfeasible and counterproductive. J. Benson Durham of DASM calls a three-point cut a “catastrophe”: as investors price in higher inflation, Treasury yields would spike, countries like Germany would offer slightly higher yields than the US to attract capital, and the dollar would collapse—ultimately leaving the US government borrowing at higher costs than today. A source close to the White House told Reuters that calls for 1% are unrealistic given the mechanics of global bond markets: “Can everyone wake up? If you break the bond market, it only helps bond investors, and nobody else.” Figures close to the president suggest rate demands should be read less as a prescription and more as a tactic to distract from issues like high consumer prices ahead of the November midterm elections.

The picture is genuinely challenging: mortgage rates are nearing 7%, diesel is at record highs, and according to a Monday Reuters/Ipsos poll, only 17% of respondents approve of the president’s handling of the cost of living—the number one issue Americans say will influence their vote in six weeks. The Fed’s preferred inflation gauge stood at 3.7% in July, and the central bank does not expect it to reach the 2% target before 2029.

Notably, Warsh is not in Trump’s crosshairs. Calling Powell an “enemy” and “thick-headed,” the president described Warsh last week as cornered by a “political” board; figures close to the administration privately congratulated Warsh after the decision. Torsten Slok, chief economist at Apollo Global, offers a brief assessment: Warsh has repeatedly stated that the Fed will deliver price stability, and the September 16 hike shows he takes that seriously. For the market, this means political pressure persists but does not dictate the direction of monetary policy for now—acting as one of the elements supporting the dollar.

Market Tour

Equities

Wall Street retreated on Wednesday amid the surge in yields: the S&P 500 fell 0.76% to 7,706, the Dow dropped 1.03% to 51,512, and the Russell 2000 lost 1.28% to 2,839. The Nasdaq 100 decoupled once again, closing nearly flat down 0.04% at 21,438. The VIX ticked up to 15.2.

Among individual stocks, Alphabet fell 3.8% to $338 as the weakest large-cap of the day, Amazon lost 2.2% to $249, Nvidia dropped 1.5% to $226, and AMD declined 1.5% to $615. Conversely, Meta held firm up 1% at $744, ASML rose 2% to $1,745 for a 9.6% weekly gain, and energy stocks climbed alongside oil (XOM +1.9% at $161, CVX +0.9% at $206). Thus, the sell-off did not broadly hit the AI theme, targeting rate-sensitive major names instead.

US futures are down 0.19% this morning. Asian markets are mixed on Thursday: MSCI Asia-Pacific ex-Japan fell 0.64%, Australia’s S&P/ASX 200 lost 1.2% to hit a three-month low with the RSI nearing oversold at 38, and the Hang Seng (-0.5%), Shanghai (-0.8%), and Sensex (-0.9%) are in the red. Japan moved in the opposite direction: supported by a weak yen, the Nikkei rose 1.2%–1.7% to 65,813, returning to an uptrend. The KOSPI rose 1% to 7,081, remaining the world’s strongest major index with a 6.9% weekly gain. European futures are down 0.3%–0.43% (DAX 25,411, CAC 8,123). The BIST 100 dropped 0.64% to 13,252, down 4.6% for the week and 8.6% for the month, with an RSI of 36.

Foreign Exchange

The dollar index hit a two-month high at 101.08–101.11, entering overbought territory with an RSI of 70, supported by strong PMI data and the yield spike following the weak auction. The euro fell to a two-month low of 1.1384 (RSI 31, oversold), and sterling touched a three-month low of 1.3240, down 1.7% for the week. USD/JPY stood at 157.8–158.2; Japanese Finance Minister Satsuki Katayama stated that the principles underlying July’s coordinated Japan-US intervention remain valid—signaling readiness to act together again if necessary—which halted the yen’s four-day slide and allowed the currency to bounce from a three-week low. Sentiment remains fragile, however, as last week’s BOJ hike failed to convince investors of a faster tightening cycle.

The Australian dollar fell 1.05% ahead of employment data to 0.7037, and the New Zealand dollar traded at 0.5677 (RSI 32). USD/CHF is at 0.8245, while USD/CAD sits at 1.4102 with an RSI of 68 in an uptrend. The offshore yuan is flat at 6.7119 as markets monitor Xi’s first US visit in three years. USD/TRY reached a new high at 48.85 with an RSI of 92. Reuters’ warning regarding emerging markets is crucial here: rising US yields strengthen the dollar and make dollar-denominated assets attractive, pulling capital out of emerging economies and increasing the cost of servicing dollar debt.

Commodities

Oil pulled back this morning after rising 4% on Wednesday: Brent fell 0.8%–0.9% to $102.16–102.20, and WTI dropped 0.8% to $91.39. Priyanka Sachdeva from Phillip Nova attributes the decline to recovering Gulf supplies and a retracement of geopolitical risk premiums amid hopes for a US-Iran diplomatic breakthrough. She notes that Brent carries a higher geopolitical and maritime route premium because international crude is more directly exposed to Middle East and Hormuz disruptions, whereas WTI benefits from relatively sheltered US supply.

Inventories also pressured prices: US crude stockpiles rose by 3 million barrels last week to 426.4 million barrels, compared to expectations for a 641K barrel draw, while distillate inventories fell by 428K barrels to 107.4 million barrels.

Diesel saw sharp intraday volatility: following a Politico report that the administration was preparing a 90-day diesel export ban, low-sulfur diesel futures fell nearly 5%, before the White House denied the report. Energy Minister Chris Wright stated a ban would not work, whereas Trump had previously indicated support. Analysts warn such a measure would not ease high energy prices, but would instead worsen global supply and further disrupt economies.

Natural gas rose 6% to $3.21, posting a 15.2% monthly gain, supported by winter supply concerns in Europe. Precious metals remain weak under rising real yields: gold trades at $4,302–$4,316 (RSI 42, down 8.1% for the month); silver is at 64.5, platinum at 1,759, and palladium at 1,278, with all three showing weekly losses. Copper gained 1.3% to $6.77, maintaining its uptrend. In grains, wheat trades flat at 708, and cocoa sits at 5,519.

Crypto

Bitcoin surged as high as $87,300 on Wednesday before sharply reversing, dropping below 84,000 to the $83,900–$84,160 band—down 2.8% over 24 hours. The mechanism stems directly from the bond market: when the 10-year yield jumped 15 bps in a day to 5.11%, the hurdle for holding zero-yield assets rose, and the cost of carrying leveraged positions increased. Bitcoin’s steepest drop came immediately after the PMI survey release.

Losses were deeper in altcoins: Dogecoin fell 7%–8% to 9 cents, AVAX dropped 8.5% to 10.26, XRP fell 6.2% to 1.51, and ADA declined 6.1% to 0.24. Ether fell 2.7% to 2,688, and Solana lost 2.8% to 115. Tron remained the most resilient major, trading flat.

Conversely, institutional inflows remained intact: spot Bitcoin ETFs saw $347 million of inflows on September 23, led by BlackRock’s IBIT with $166 million, marking the fifth consecutive day of inflows. Ether ETFs also attracted $105 million, with BlackRock’s ETHA drawing $50.8 million. Thus, fund demand persists even as prices fall, indicating that the move is a yield-driven repricing rather than a fundamental sell-off.

Friday is critical on the technical front. Deribit hosts roughly $14 billion in options expiries—considered the largest of the year—and Bitcoin is currently trading below the $85,000 strike price where Ledn co-founder Mauricio Di Bartolomeo detected a large call option block. Bitcoin failed to hold within a few hundred dollars of its yearly opening price yesterday, making a test toward the old yearly low around $75,000 more probable. This same area is cited as the max pain point for Friday’s expiry.

Option structures also support the downside: stronger positive gamma sits in the $74,000–$75,000 range, while the zero-gamma flip point is near 72,000 and gaining significance. This does not mean Bitcoin is destined for 72,000, but if prices continue falling and positive gamma breaks down, the options structure will increasingly support a deeper test. As a short-term scenario, following the completion of the five-wave advance, the initial correction target is marked at 80,000, with the main bottom zone at 78,000–75,000. 78,000 also serves as the liquidation zone where leveraged long positions are flushed out. The positive picture for open interest and large wallets shows no lack of dip buyers.

Second Story: Cost of Quantum-Resistant Bitcoin Transactions Drops Fivefold in a Week

StarkWare announced that AI-assisted coding has reduced the estimated computing power cost of preparing a quantum-resistant Bitcoin transaction from approximately $320 to $66. The initial figure came from a transaction mined on the Bitcoin network in August, which required roughly 3,100 hours of computation across a fleet of about 100 GPUs; the $320 represented the cost of computation performed before the transaction hit the chain, separate from on-chain writing fees.

StarkWare subsequently opened the code to a competition, with most participants utilizing AI coding tools to accelerate the search process. The leading submission achieved roughly 881 million candidate checks per second on the same GPU benchmark, compared to about 146 million in the initial code.

The problem this method aims to solve is clear: a sufficiently powerful quantum computer could use a wallet’s exposed public key on-chain to compute the private key and steal coins. StarkWare’s method adds a hash-based defense expected to withstand such attacks, and because it complies with Bitcoin’s existing rules, it does not require network approval for an upgrade—serving as an emergency option to move vulnerable coins if the quantum threat arrives before a broader solution is adopted.

While lower costs make this practical, $66 is still an estimate, and CoinDesk calculations using the same accelerations put the figure around $83. The method has limitations: these transactions must be sent directly to a miner, and they do not protect coins whose public keys are already exposed—precisely the group a quantum attacker would target first. Nevertheless, the news is significant on two fronts: crypto infrastructure quantum readiness is accelerating, and AI itself is what is driving that acceleration.

Levels to Watch

• US 10-Year, 5.11% / 5.50%: Highest since 2007. According to JPMorgan’s survey, the equity market’s break threshold may have shifted to the 5.5%–6.0% range; Jackson’s metric of a 12-month average still sits at 4.34%.
• US 5-Year, 5.00%: Surpassed for the first time since 2007. If demand remains weak in the next auction, the sell-off will spread from the belly of the curve.
• Bitcoin, 80,000 / 78,000 / 75,000: Initial correction target, liquidation zone, and max pain point for Friday’s expiry. The $14 billion expiry could magnify moves; holding above 85,000 invalidates the scenario.
• Brent, 104 / 98: Wednesday’s peak and the bottom of the six-day decline. Unless Iran backpedals on conditions, the premium will not fully unwind; diesel ban headlines drive sharp two-way moves.
• Dollar Index, 101.1: Two-month high, overbought with an RSI of 70. If today’s jobless claims and Fed speeches confirm the trend, the advance continues; weak data would trigger profit-taking.
• USD/JPY, 158.2: Katayama’s joint intervention message halted the four-day slide. Approaching 160 implies a second warning or direct intervention risk.

Calendar of the Week

Date	Day	Event
September 24	Thursday	US weekly jobless claims (consensus 201K) and August new home sales (consensus 615K); Fed’s Williams and Hammack speak; Germany Ifo, French business & consumer confidence, UK GfK consumer confidence; Trump-Xi meeting; Swiss, Swedish, and Norwegian central bank rate decisions
September 25	Friday	Crypto options expiry on Deribit totaling ~$14 billion (largest of the year)
September 28	Monday	Projected date for mainnet activation of Solana Agave 4.3 features
End of September	—	Reserve Bank of Australia (rate hike priced in); October 6 Ethereum Amsterdam test
End of October	—	FOMC (probability of a hike near 70%)
November 3	Tuesday	US midterm elections; trade truce extended by two months, new deadline end of November