# Global Macro — Risk assets resist the bond selloff as stress concentrates in rates and emerging-market FX

The most informative development on 25 September is not another high in long-dated yields. It is the widening gap between what bond markets and equity markets are pricing. Global stocks were heading for their best weekly performance since early August even as the U.S. 10-year Treasury traded around 5.17%, the 30-year around 5.46% and Japan's 10-year government bond touched 3.115%, its highest level since 1996. Reuters attributed the equity resilience primarily to renewed enthusiasm around AI and to hopes that Middle East energy supply conditions could improve.

That divergence matters because it argues against describing the current episode as a uniform tightening shock. The same macro environment is producing different outcomes across balance sheets and asset classes. Large equity indices are still supported by earnings and capital-expenditure expectations, while long-sensitivity to long-term interest rates bonds remain under inflation and fiscal pressure and some emerging-market currencies are absorbing the combination of a stronger dollar, expensive energy and high U.S. yields.

The signal for today is therefore selective absorption, not a realized economy-wide refinancing squeeze. Mortgage rates above 7% and weak Treasury auctions remain relevant background evidence of tighter financing conditions, but they do not by themselves prove broad corporate or sovereign refinancing stress.

## Equities and bonds are sending different signals

Reuters reported that the MSCI world index was on course for its strongest week since early August on 25 September. Japan's Nikkei rose just over 1% and the STOXX 600 gained about 0.5% in early European trading. At the same time, long sovereign yields remained near multi-decade highs: the U.S. 10-year traded near 5.17%, the 30-year near 5.46%, and Japan's 10-year JGB touched 3.115%.

This is not a claim that equities have become insensitive to interest rates. It means that, for now, earnings expectations and sector-specific investment narratives are offsetting part of the valuation pressure from higher discount rates. Reuters described AI optimism as one of the forces supporting shares, while the possibility of improved Middle East energy flows reduced part of the inflation extreme downside risks.

| Market signal | 25 Sep observation | What it says — and does not say |
| --- | --- | --- |
| MSCI world equities | On course for best week since early August | Equity risk appetite remains resilient; it does not prove financial conditions are easing |
| Nikkei 225 | Up just over 1% in early trade | Japanese equities absorbed another rise in JGB yields |
| U.S. 10Y Treasury | Around 5.17% intraday; 5.18% official 24 Sep close | Long-sensitivity to long-term interest rates pricing remains restrictive |
| U.S. 30Y Treasury | Around 5.46% intraday; 5.47% official 24 Sep close | sensitivity to long-term interest rates and inflation/fiscal risk remain expensive |
| Japan 10Y JGB | 3.115%, highest since 1996 | The global rate shock remains visible outside the U.S. |
| Indonesian rupiah | Down nearly 1% on the week; weakest weekly performance since late May | Higher U.S. yields, dollar strength and energy costs are transmitting more clearly into some EM currencies |

```chart
type: line
title: U.S. 10-year Treasury yield — 22 to 24 September 2026
unit: %
22 Sep | 4.96
23 Sep | 5.11
24 Sep | 5.18
```

The Treasury chart is background rather than today's thesis. The relevant change is that equities have not followed the bond selloff one-for-one. If this divergence persists, the distribution of financing pressure matters more than a single aggregate risk-on/risk-off label.

## Energy diplomacy is changing the extreme downside risks before it changes the physical system

Oil eased on 25 September as markets considered a possible U.S.-Iran truce. Reuters reported that negotiators were exploring a phased path that could include reopening the Strait of Hormuz. This remains a reported negotiating framework, not an agreement, and oil was still above $100 a barrel.

That distinction is central. Markets can price the probability of future supply normalization before tanker traffic, insurance costs and export volumes actually normalize. The immediate effect is therefore financial: lower perceived energy extreme downside risks can support equities and provide some relief to bonds even when the physical supply system remains constrained.

The test is observable. A durable improvement would require verified navigation through Hormuz, lower freight and insurance costs, sustained export throughput and a corresponding decline in energy-sensitive inflation pressure. Without those changes, the current oil retreat is evidence of diplomatic optionality, not proof that the shock has ended.

## Emerging-market FX shows where the rate-and-energy mix is biting more directly

Indonesia provides a clearer example of transmission than broad claims about global refinancing. The rupiah was heading for its largest weekly decline since late May, down nearly 1% on the week and trading as weak as 17,935 per dollar on 25 September. Reuters linked the move to higher U.S. Treasury yields, dollar strength and expectations that U.S. rates would stay higher for longer.

Bank Indonesia kept its policy rate at 5.75% this week after raising it by a cumulative 100 basis points between May and June. The central bank indicated a preference for market-based support for the currency while higher oil prices and U.S. yields remained sources of pressure. The mechanism is therefore observable without assuming a generalized crisis: imported energy raises the external and fiscal burden, high U.S. yields increase the opportunity cost of holding local assets, and a stronger dollar adds pressure to the exchange rate.

Other Asian currencies did not move in the same direction. The Malaysian ringgit, South Korean won and Taiwan dollar rebounded on 25 September, while several regional equity markets rose. That dispersion is important contrary evidence. The shock is selective, and country-specific policy credibility, external balances, energy exposure and market positioning affect the outcome.

## Housing confirms tighter pricing, but not yet a broad refinancing event

Freddie Mac's Primary Mortgage Market Survey put the U.S. 30-year fixed mortgage at 7.03% on 24 September, up from 6.95% one week earlier and 6.71% on 3 September. This is direct evidence that household borrowing prices have risen. It is not, by itself, evidence of widespread refinancing distress, corporate rollover problems or sovereign financing failure.

The distinction between price and realized stress should remain explicit. Higher mortgage and bond yields create a more restrictive hurdle rate. A broader refinancing constraint would require additional evidence such as falling refinancing volumes, weaker housing transactions, widening corporate spreads, larger new-issue concessions, deteriorating debt-service metrics or repeated sovereign auction failures.

This narrower interpretation also explains why equities can remain firm at the same time. A large profitable company with strong cash generation and access to equity markets does not face the same transmission channel as a household, a leveraged borrower or an emerging economy dependent on external capital.

```flow
AI earnings and capex expectations + prospective Middle East supply relief → support equity risk appetite
Inflation, fiscal supply and central-bank tightening expectations → keep long sovereign yields elevated
High U.S. yields + firm dollar + imported-energy exposure → increase pressure on vulnerable emerging-market currencies
Higher mortgage rates → tighten the price of household credit, without by themselves proving broad refinancing distress
Cross-asset outcome → resilience in major equity indices coexists with stress in duration and selected FX channels
```

## The divergence can resolve in either direction

There are two broad ways the current configuration can converge. The benign route would be sustained energy normalization, lower inflation compensation and a retreat in long yields while earnings expectations remain intact. The adverse route would be long yields staying high long enough to weaken valuations, credit creation or earnings expectations, pulling equities toward the signal already visible in bonds and selected currencies.

Neither route is established yet. The current evidence is a cross-asset divergence with uneven transmission. That is more precise than treating every rise in yields as a new systemic shock or treating equity resilience as proof that higher borrowing costs no longer matter.

The highest-information variables now are whether the MSCI world index and other broad equity gauges remain resilient after the latest bond market price adjustment; whether the U.S. 10- and 30-year yields retreat or consolidate above 5%; whether rupiah pressure broadens to other emerging currencies; whether mortgage rates remain above 7%; and whether Hormuz traffic and energy exports actually improve rather than merely being anticipated.

## Sources

- U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates, 22–24 Sep 2026: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?field_tdr_date_value_month=202609&type=daily_treasury_yield_curve
- Freddie Mac, Primary Mortgage Market Survey, 24 Sep 2026: https://www.freddiemac.com/pmms
- Reuters, global markets and cross-asset divergence, 25 Sep 2026: https://www.reuters.com/world/china/global-markets-warpup-1-pix-2026-09-25/
- Reuters, Asian FX and the Indonesian rupiah, 25 Sep 2026: https://www.reuters.com/world/asia-pacific/rupiah-heads-biggest-weekly-fall-since-may-higher-us-yields-firm-dollar-2026-09-25/