🚨 Bond market turmoil: what rising yields mean for your portfolio
- NexxtGen Markets
- May 23
- 4 min read
Good morning, here's the latest Global Financial Markets update from Steve Halls at NexxtGen Markets here in the City of London...
Markets are flashing warning signals, and it’s coming straight from the bond market. A global sell-off in bonds has rattled investor confidence, sending Treasury yields soaring and putting fresh pressure on equities. Meanwhile, risk assets like Bitcoin and gold are showing resilience as the macro landscape shifts sharply.
📉 Market recap: equities retreat as yields climb
Last week, the major US indices all slipped:
The sell-off was driven by a sharp rise in bond yields, with the 10-year Treasury yield jumping to 4.61%, its highest level in months. Long-duration bonds, especially in the U.S., Japan, and Europe, saw heavy selling.
Elsewhere, Bitcoin held firm above $110,000 after briefly crossing $111K — marking its strongest weekly and monthly close ever. The digital asset has now posted five consecutive daily gains, underscoring its safe-haven appeal during global uncertainty.
Gold gained 3% amid the flight to safety, while WTI crude oil dropped 2.5% as traders weighed weakening demand signals.
🔺 Market movers of the week
🛑 Why the bond market is flashing red
A cascade of events has shaken confidence in sovereign debt markets. The U.S. credit downgrade, fears surrounding Trump’s $3.8 trillion tax cut, and higher inflation expectations have driven a global repricing of risk.
Yields on long-term U.S. bonds have surged:
10-year Treasury: 4.61%
30-year Treasury: Over 5%
These levels signal that investors are demanding higher compensation to hold government debt — a clear sign of concern over America’s fiscal trajectory.
Outside the U.S., Japanese government bonds are also feeling the heat. The 30-year yield hit a 25-year high, drawing capital back to Japan and reducing demand for U.S. Treasurys. A prolonged pullback by Japanese investors could drive U.S. yields even higher, hurting both bond and stock markets in the process.
🤔 What does this mean for your portfolio?
1. Stocks may struggle
Higher yields increase the opportunity cost of holding equities. This is particularly true for high-growth, tech-heavy names with low earnings and high debt, where rising rates can compress valuations.
2. Bonds are now attractive
New bonds offer significantly better returns, making them an appealing alternative for conservative investors or those seeking income. Long-duration Treasurys are now yielding well above 4%, potentially offering downside protection if recession risks rise.
3. Foreign buyers are pulling back
Rising yields in countries like Japan mean less demand for U.S. bonds, which historically helped keep American borrowing costs low. This could introduce greater volatility across global markets.
4. Borrowing costs are rising
Whether it’s your mortgage, a corporate loan, or project finance — higher interest rates translate into higher costs. Rate-sensitive sectors like real estate, utilities, and consumer discretionary could face growing headwinds.
💊 Novo Nordisk slashes Wegovy prices
Pharma giant Novo Nordisk is aggressively targeting self-paying patients by offering its blockbuster weight-loss drug Wegovy at $199 for the first month and $499 thereafter through June. This move comes as the FDA cracks down on unauthorised semaglutide copies, limiting competition. Competitors like LifeMD are already bundling similar offers to retain market share.
☀️ Solar stocks scorched by tax rollback
Clean energy names took a beating after a Republican tax bill proposed eliminating key green energy credits.
First Solar fared better as domestic manufacturing subsidies remain intact. However, uncertainty looms as the Senate could still amend the bill.
🧠 Quantum stocks light up the charts
Speculative tech rebounded sharply. IonQ surged 36%, D-Wave rose 24%, and Rigetti gained 26% after IonQ’s CEO likened the company to Nvidia in the early AI days. Despite the jump, these stocks remain well off their 2024 highs, indicating the sector’s volatility.
🛒 Amazon gains on Ackman disclosure
Amazon edged up nearly 1% after Bill Ackman’s Pershing Square revealed a new stake. The stock is now 17% higher over the past month, just 16% below its 52-week high. Institutional support continues to fuel Big Tech momentum.
🧰 Advance Auto Parts jumps on earnings
Advance Auto Parts rocketed 57%, its biggest one-day gain ever, following a strong earnings beat and heavy short covering. While still 31% below its highs, demand for auto maintenance remains firm amid elevated new car prices.
🔎 What to watch
Nvidia earnings: Options markets are pricing a 7.4% move on results due May 28.
Airline stocks: Names like Delta, JetBlue, and Southwest are rallying on hopes for a blockbuster summer travel season.
Ross Stores: Shares fell over 11% after pulling full-year guidance, citing tariffs and inflation.
Intuit: Gained 8% post-earnings on a strong tax season and rising AI adoption.
Workday and Deckers Outdoor: Both fell after mixed results and cautious outlooks driven by trade policy fears.
📆 Key event today
2pm GMT – U.S. New Home Sales (April): Forecast -4.7%. Implications for the USD and housing stocks.
✅ Summary
Bond markets are flashing red, tech is on the defensive, and global capital flows are shifting fast. Stay diversified, stay informed — and above all, stay flexible.
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