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Bond Market News
US Treasury yields continued to rise on Tuesday
September 2, 2026
US Treasury yields continued to rise on Tuesday as US-Iran hostilities persisted. The 10Y touched the 4.8% mark, first time since Jan 2025. On the data front, the ISM Manufacturing PMI for August softened to 54.6 as compared to July’s 55.6 and expectations of 55.2. Among the sub-components, both New Orders and Employment indices fell while the Price Paid index rose. Markets are currently pricing-in a 25bp Fed rate hike in October. German Bund yields touched their highest level in 15 years and UK Gilt yields touched their highest level in 18 years.
Looking at equity markets, the S&P and Nasdaq ended lower by 0.7% and 1.0% respectively. US IG CDS spreads were 0.7bp wider, and HY CDS spreads widened by 3.4bp. European equity markets ended lower too. European IG CDS spreads were 1.2bp wider, and Crossover spreads widened by 3.7bp. Asian equity markets have opened broadly lower this morning. Asia ex-Japan CDS spreads widened by 0.2bp.
Rating Changes
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Moody’s Ratings upgrades ASR Re’s IFSR to A3; outlook stable
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Fitch Upgrades Banco BTG Pactual Chile’s IDRs to ‘BBB+’; Outlook Stable
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Moody’s Ratings downgrades General Shopping to C; outlook remains stable
Term of the Day: Golden Power
Golden Power refers to the special power of the Italian government to limit or stop foreign direct investments (FDI) and corporate transactions that involve Italian strategic assets. This provision was introduced in 2012 and now applies to sectors like defense, infrastructure networks, critical infrastructures and technologies, the iron and steel industry, agri-food, 5G, fintech/insurtech and smart contracts.
Talking Heads
On Surging Bond Yields a Threat to the Global Stock Rally – Georgios Leontaris, HSBC
“If we were to see a sudden disorderly spike in yields, that is something equity markets would eventually respond to.”
“People love to use the phrase ‘higher for longer’… We would argue a far better characterization is normal for longer.”
On Market Can Absorb ‘Attractive’ Tech Debt – JP Morgan
“We think that the market is very capable of absorbing this new issuance. And if anything, it might just enable this AI boom to be sustainable,… Debt is not inherently bad by any means, but it can be a really attractive form of financing for some of these hyper-scalers building data centers that they intend to use for five, 10 or more years”
Top Gainers and Losers- 02-Sep-26*
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