Fiscal Jitters Push US Stocks Down; European Bond Yields Up To Multiyear Highs

• Global stocks fell and long-dated bond yields in Europe hit multi-year highs on Tuesday as investors grew increasingly worried about the state of finance in countries around the world.
• U.S. indices closed lower, with the Dow Jones down 0.55%, S&P 500 off 0.7%, and Nasdaq falling 0.8%.
• Meanwhile, European bond markets saw sharp moves, with France’s 30-year yield at 4.5% (16-year high), Germany’s at 3.4% (14-year high), and UK gilts at their highest since 1998, as investors looked warily ahead to the government's autumn budget plans.
• French Prime Minister Francois Bayrou looks set to lose a confidence vote as opposition parties balk at his cuts to government spending, while British finance minister Rachel Reeves is expected to raise taxes in her autumn budget to remain in line with her fiscal targets.
• "Global bond markets are starting the month with a nervous glance towards upcoming government budget discussions in the U.S. and in Europe," Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute.
• Bond yields move inversely to prices and yields, especially on super-long-dated 30-year bonds, have been soaring around the world, with investors concerned about the scale of debt in countries from Japan to the United States.
• Kenneth Broux, head of corporate research FX and rates at Societe Generale, noted that "the flurry of new primary issuance that awaits investors in the coming days and weeks threatens to exacerbate the global selloff in the long end.

(Source: Reuters)