Global stocks weather turbulent quarter as bond yields surge

Global stock markets have weathered a turbulent third quarter despite surging global borrowing costs, currency interventions, wars, oil above $100 a barrel, and AI-related warnings, with investors more concerned about government bond market turmoil than equity losses. The key 10-year US Treasury yield has soared past 5% to its highest level since before the 2007 financial crash, while yields in Japan, Germany, France, and Britain hit multi-decade peaks, causing significant losses for bond investors. AXA chief economist Gilles Moec said this rise reflects a new structural trend making markets "very, very nervous." Despite some setbacks, including South Korea's KOSPI index falling nearly 20% and oil rising 40% in the quarter, world stocks have been supported by unprecedented earnings growth, with S&P 500 earnings expected to jump at least 30% this year. Investors now watch upcoming US midterm elections and whether sustained high bond yields will eventually crack the AI-driven equity rally.