Stocks made modest gains on Tuesday while global government bonds and cryptocurrencies steadied, offering a pause after the sharp sell-off that swept through markets on Monday as investors braced for a looming interest rate hike in Japan.
S&P 500 futures were flat following overnight declines on Wall Street, and equities in both Europe and Asia edged slightly higher.
Sentiment improved somewhat after a solid auction of Japanese government bonds eased pressure on a market that has been rattled for weeks. Japanese 10-year and 30-year yields slipped by about one basis point each, a small but notable cooling after their dramatic climb. The surge in yields has been driven by concerns about Japan’s worsening fiscal position and rising expectations that the Bank of Japan is preparing to lift rates, pushing 10-year yields to a 17-year high and 30-year yields to their highest level on record.
Monday’s turmoil in Japanese debt markets quickly spilled into global fixed income. The U.S. 10-year Treasury yield jumped nearly 8 basis points, while the German 10-year Bund yield rose almost 6 basis points, helping drag equities lower. The calm in JGBs on Tuesday translated into steadier global bonds. The 10-year Treasury yield hovered at 4.09%, unchanged on the day, while the Bund yield held at 2.75%.
Cryptocurrencies mirrored the relative calm but remained under pressure. Bitcoin inched higher on Tuesday after tumbling 5.2% the day before, trading at about $87,000. It has now fallen roughly 30% from its October peak, deepening a weeks-long slump that has alarmed digital-asset traders. Some market participants see bitcoin as an early barometer for broader risk appetite, though traditional investors appear mostly unfazed.
“Things are pretty stable currently. We’re closing this year with few—touching wood—negative surprises,” said Samy Chaar, chief economist at Lombard Odier. “Yesterday was mainly a non-event except for crypto assets. We’ve had a huge rout in bitcoin in recent weeks, and frankly the impact on global markets has been limited.”
Sentiment within the crypto industry, however, is noticeably darker. Jehan Chu, founder of blockchain venture firm Kenetic Capital, said trading desks are shifting into defensive mode.
“The mood in cryptocurrencies is ranging between fearful and resigned,” he said. “The latest drop caught investors by surprise. The next couple months are crucial, but even the most bullish may be settling in to hibernate for the winter.”
In currency markets, the Japanese yen softened slightly, with the dollar rising 0.35% to around 156 yen and the euro gaining by a similar margin. Monday’s rebound in the yen had eased concerns that the Bank of Japan would intervene to support the currency, which has been battered for much of the year. The dollar was broadly steady after weakness on Monday briefly lifted the euro above $1.165; it last traded around $1.1605.
Expectations of diverging policy paths are quietly reshaping currency bets. Investors increasingly anticipate that Japan will tighten rates while the U.S. Federal Reserve moves toward deeper and faster cuts. Fresh U.S. data on Monday reinforced expectations of a December rate cut after manufacturing contracted for a ninth straight month in November, even as consumers defied forecasts by spending $23.6 billion in online holiday shopping.
Gold slipped 1% to fall back below $4,200 an ounce, though it remains only about 4% shy of its all-time high reached in October. Silver dropped nearly 2%. Oil prices, which climbed earlier after drone strikes hit Russian energy infrastructure, were stable. Brent crude traded at $63.10 a barrel and U.S. crude at $59.21.
Markets now head into the final stretch of the year balancing two competing forces: Japan’s long-awaited rate shift, which could upend global bond dynamics, and the likelihood of U.S. monetary easing, which could weaken the dollar and reshape risk sentiment heading into 2026.
