Bond Selloff Extends, Shares Rise on Tariff Delay: Markets Wrap

(Bloomberg) — A global bond selloff accelerated in Asia on Thursday, pushing Japanese benchmark yields to the highest in more than a decade after heavy selling in German bunds spread across fixed income markets. Asian stocks were buoyed by a delay to some US tariffs on Mexico and Canada.

Japan’s 10-year yield touched 1.5% for the first time since June 2009, as the country manages rising inflation and higher borrowing costs. Treasuries fell, pushing the US 10-year yield higher for a third day to trade around 4.3%. Bund futures extended Wednesday’s decline while European equity-index futures rose about 1% ahead of the European Central Bank’s policy meeting. 

The moves show how geopolitical volatility over the past few weeks that includes fraying US support for Ukraine and whipsawing news on tariffs has impacted financial markets as traders gauge the impact on growth and inflation. Also weighing on the fixed-income markets is Germany’s historic plan to ramp up spending with Chancellor-in-waiting Friedrich Merz declaring his country would do “whatever it takes” to defend itself.

“The last time the bond market took note of a pledge to do ‘whatever it takes’ it came as relief,” Citi strategists led by Jamie Searle wrote, citing ECB President Mario Draghi’s pledge in 2012 to save the euro. This time, however, it “comes as a warning to bond valuations.”

The selloff was sparked by a sudden drop in German bonds that sent 10-year bund yields as much as 31 basis points higher Wednesday, the most since 1990. The euro had its best three-day rally since 2015 ahead of the ECB’s policy decision meeting on Thursday. Analysts polled by Bloomberg almost unanimously predict a quarter-point cut by the monetary authority. US data expected Thursday includes initial jobless claims ahead of Friday’s monthly payrolls figures. 

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Bund futures extended Wednesday’s decline, with markets paring wagers on further rate cuts by the ECB as expectations build around the scale of borrowing required to finance spending plans to counter the threat of Russian aggression.

Year-to-date gains on euro-denominated investment-grade corporate bonds were wiped out on Wednesday, a Bloomberg index showed. The notes have now lost 0.2% so far in 2025, after suffering their biggest drop Wednesday since June, 2022.

In European news, Klarna Bank AB, the Stockholm-based payments business, is seeking to raise at least $1 billion in a US initial public offering. The company aims to price the IPO in early April and is targeting a valuation of more than $15 billion in the New York Stock Exchange listing. Deutsche Post will reduce around 8,000 positions at Post & Parcel Germany and Deutsche Lufthansa AG expects 2025 earnings to be significantly higher than last year.

Asian stocks were buoyed by a delay to some US tariffs on Mexico and Canada. The Hang Seng China Enterprises Index jumped as much as 3.3%, reflecting investors’ heightened expectations for more supportive measures that may be announced at Chinese government ministries’ joint press conference in Beijing.

On Wednesday, Chinese officials announced an expansion target of about 5% for 2025 at its annual parliamentary session, marking the first time in more than a decade Beijing had set the same goal for three straight years. President Xi Jinping signaled China’s determination to push ahead with an ambitious growth goal this year, despite the trade war.

The NPC’s message of focusing on technology innovation and consumption was encouraging and “should help to sustain the market’s momentum,” according to Morgan Stanley’s strategist Laura Wang.

US equity-index futures edged lower, weighed by tech stocks. Shares in Marvell Technology Inc. dropped in after-hours New York trading late Wednesday after delivering an underwhelming revenue forecast, disappointing investors expecting a greater payoff from the AI boom. Broadcom Inc., another chipmaker tied to the AI surge, fell 3.5% in after-hours trading ahead of its earnings report Thursday.

Meanwhile, the White House said auto tariffs on Mexico and Canada would face a one-month delay. After talks with Canadian Prime Minister Justin Trudeau, White House press spokesperson Karoline Leavitt said US President Donald Trump is open to hearing about additional tariff exemptions. 

An index of the dollar was steady after falling 1% Wednesday, weakening against most major currencies, with losses particularly stark against the euro.

Oil edged higher from the lowest close in six months and gold was steady near its record high. 

Key events this week:

• Eurozone retail sales, ECB rate decision, Thursday
• US trade, initial jobless claims, wholesale inventories, Thursday
• US Treasury Secretary Scott Bessent speaks, Thursday
• Fed’s Christopher Waller and Raphael Bostic speak, Thursday
• Eurozone GDP, Friday
• US jobs report, Friday
• Fed Chair Jerome Powell gives keynote speech at an event in New York hosted by University of Chicago Booth School of Business, Friday
• Fed’s John Williams, Michelle Bowman and Adriana Kugler speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 6:44 a.m. London time
• Nasdaq 100 futures fell 0.1%
• The MSCI Asia Pacific Index rose 1.1% to the highest since Feb. 24
• Japan’s Topix rose 1.2% to the highest since Feb. 19
• Hong Kong’s Hang Seng rose 2.6% to the highest in about three years
• The Shanghai Composite rose 1.1%, more than any closing gain since Feb. 6
• Euro Stoxx 50 futures rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index was unchanged
• The euro strengthened 0.2%,rising for the fourth straight day, the longest winning streak since Feb. 14
• The Japanese yen was little changed at 148.81 per dollar
• The offshore yuan was little changed at 7.2417 per dollar
• The British pound was little changed at $1.2900

Cryptocurrencies

• Bitcoin rose 1.6% to $91,849.92
• Ether rose 2.6% to $2,293.33

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.31%
• Germany’s 10-year yield advanced 30 basis points to 2.79%
• Britain’s 10-year yield advanced 15 basis points, more than any closing advance in about 11 months

Commodities

• Spot gold was little changed
• West Texas Intermediate crude rose 0.6% to $66.74 a barrel, ending a four-day losing streak

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson, Finbarr Flynn and Toby Alder.

©2025 Bloomberg L.P.