Global financial markets remained under pressure on Friday as surging US Treasury yields strengthened expectations for further Federal Reserve rate increases, helping the US dollar extend its advance against major currencies.

The dollar was on track for a second consecutive weekly gain, its first such run in more than three months. The euro slipped to around $1.1370, its lowest level in two months, while sterling traded near a three-month low. The dollar also strengthened against the Japanese yen, keeping intervention concerns in focus.

Treasury yields climb

The latest moves have been driven largely by the bond market. Longer-dated US Treasury yields have risen sharply, with the 10-year yield reaching around 5.2%, its highest level since 2007. The 30-year Treasury yield also reached its highest level in more than two decades.

Higher yields have strengthened expectations that the Federal Reserve could raise interest rates again after its September increase. Recent US economic data showing resilient business activity and a steady labour market have added to concerns that inflation could remain elevated.

Global stocks face pressure

The bond-market selloff is also creating challenges for equities. Higher government bond yields can increase borrowing costs and make fixed-income assets more competitive with stocks, putting pressure on equity valuations.

Asian markets were mixed on Friday as investors assessed the impact of the jump in global borrowing costs. Japan was among the markets affected by the renewed bond-market pressure.

For traders watching global markets, the combination of higher US yields, a stronger dollar and shifting expectations for Federal Reserve policy remains a key driver across currencies, equities and precious metals.

Market focus: Traders will continue watching US inflation and economic data for clues about whether the current rise in yields and expectations for additional rate increases can persist.

This article is intended solely for educational and informational purposes and does not constitute investment, trading or financial advice. Market conditions can change rapidly. Leveraged financial products carry significant risk and may not be suitable or legally available to all investors. Indian residents should ensure that any foreign-exchange or derivatives activity complies with applicable RBI, FEMA and SEBI requirements.