Global stocks moved closer to record highs as investors continued to look past elevated oil prices and bond yields hovering near multi-decade highs. A technology-led rally on Wall Street pushed the Nasdaq 100 to a record close, while gains in Nvidia and Microsoft helped the S&P 500 move within 0.5% of its all-time high.

The positive tone carried into Asian markets, with MSCI’s Asia-Pacific index rising around 0.1%, leaving it roughly 2% below its record. The MSCI All Country World Index was also less than 1.5% below its August high, while equity futures in Europe and the US pointed to further gains. For now, investors’ appetite for stocks remains resilient despite growing pressure across bond and currency markets.

That resilience is being tested by the continued rise in government borrowing costs. Treasuries extended their losses, with the US 10-year yield rising around 1 basis point to 5.32%, close to levels last seen in 2002. The two-year yield climbed around 2 basis points to 4.83%, while government bonds in Japan, Australia and New Zealand also declined after following the weakness in US Treasuries.

US Treasury Secretary Scott Bessent said the US can achieve 3% economic growth while restraining spending, arguing that this combination could “very quickly” begin to change the trajectory of government borrowing. His comments come as elevated Treasury yields continue to keep government financing costs firmly in focus.

Fiscal concerns are particularly prominent in Europe. Emmanuel Moulin, governor of the Banque de France, warned that France risks being “strangled by interest rates” if it fails to clean up its public finances, according to the Financial Times. The euro remained near a 17-month low as investors continued to assess the implications of rising borrowing costs and France’s fiscal outlook.

Political developments are adding to that uncertainty. Marine Le Pen and her party are set to present alternative budget proposals alongside plans to reduce France’s deficit, keeping the country’s fiscal position firmly on the market’s radar. With few major economic data releases ahead, political and fiscal developments could play a larger role in determining the next move in European markets.

Oil prices, meanwhile, recovered modestly after falling around 2% on Monday. Brent crude rose about 0.6% to approximately $100.90 a barrel as rising Persian Gulf exports and a Saudi price cut pointed to a looser market. The move suggests that improving supply flows are helping ease some of the pressure that had kept oil prices elevated.

Japan also remained in focus after the Government Pension Investment Fund did not discuss portfolio allocation at a meeting last month. The decision dampened speculation that the roughly $2 trillion fund could respond to calls from Prime Minister Sanae Takaichi’s administration to increase its purchases of Japanese assets.

Trade tensions provided another source of uncertainty. Germany and France are urging the European Union to adopt new powers that could allow the bloc to cut China or other countries off from the single market. Such measures risk provoking a response from Beijing just days before key talks on trade imbalances and other disputes.

Gold slipped around 0.4% to roughly $4,120 an ounce, while markets continued to balance strong equity momentum against rising bond yields, fiscal concerns and geopolitical and trade risks. With the economic calendar relatively light, investors are now looking for the next catalyst to determine whether the current equity rally can continue while pressure builds across bonds and currencies.

FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.

FISG — Interstellar Group