Global risk sentiment turned cautious overnight as a broad bond selloff drove US 10-year Treasury yields to approximately 4.72% and the 30-year above 5.31%, with fiscal deficit concerns and sticky inflation cited as the primary drivers. Renewed Middle East tensions following the expiration of the US-Iran ceasefire and stalled diplomatic talks pushed Brent crude above $91/bbl, reigniting inflation fears and adding further pressure to equity valuations. The VIX rose 4.28% to 15.84, signalling a modest but notable pickup in near-term hedging demand, while the US dollar retained its bid as investors sought safety in the greenback. Central banks — the ECB holding at a 2.25% deposit rate and the BoE similarly on pause — offered no fresh policy catalysts to offset the macro headwinds.
For Asia-Pacific markets opening today, the dominant cross-asset signal is the tension between rising US yields weighing on rate-sensitive equities and a bifurcated regional picture where Chinese and Hong Kong markets outperformed on their own domestic stimulus narrative. The AUD/USD slipped 0.28% to 0.7088, reflecting softer commodity sentiment with copper off 2.27%, silver down 3.96%, and iron ore easing 0.23% to $94.95/t — a cocktail that pressures Australia's resources-heavy index. The ASX 200 closed Tuesday down 0.46% at 9,073.2 and faces a cautious open, with the domestic Wage Price Index release at 11:30 AEST the key local data point, while energy names may find support from elevated crude prices and the Materials sector will need to absorb broad base metals weakness.