Equities And Bonds Recover As Treasury Sell-Off Reverses; Risk-On Mood Returns

Global markets staged a broad recovery on Tuesday as investors stepped back into equities and bonds following last week’s sharp Treasury sell-off. The rebound reflected improving risk appetite and growing confidence that the recent surge in yields may have overshot fundamentals.

U.S. Treasury yields eased across the curve, offering relief to rate-sensitive sectors that had been pressured by rising borrowing costs. The 10-year yield pulled back from multi-week highs, helping equity indices stabilize and regain upward momentum. Tech and consumer discretionary stocks led the charge, while defensive sectors consolidated.

In Europe, equity markets mirrored the recovery, supported by softer yields and improved sentiment linked to lower energy prices. Financials and industrials saw the strongest gains, while the euro held steady amid expectations that the ECB will remain cautious heading into early 2026.

Asian markets also participated in the bounce, with Japan’s Nikkei and Hong Kong’s Hang Seng rising as investors unwound defensive positions established during the Treasury spike. The shift in tone brought renewed support to regional currencies, particularly the Korean won and Australian dollar.

Bond markets attracted fresh inflows, a sign that investors view the prior sell-off as an opportunity rather than the start of a sustained repricing. Credit spreads narrowed, and corporate bond issuance picked up after several quieter sessions.

In commodities, gold traded slightly higher as yields drifted lower, though the broader risk-on mood limited upside momentum. Oil prices remained range-bound as traders weighed supply uncertainty against weaker demand projections.

With volatility easing and risk sentiment improving, traders are now focused on upcoming U.S. labor and inflation data to gauge whether the bond-market reversal marks a temporary correction or the beginning of a more durable shift in macro expectations.