BI Decision Awaited Amid Global Bond Yield Surge and War Tensions
Indonesia’s financial markets are expected to remain volatile today, particularly as investors adopt a wait-and-see approach ahead of Bank Indonesia’s decision. From overseas, the ongoing war and the release of the Federal Open Market Committee (FOMC) meeting minutes will be the main drivers.
On Wall Street, US stocks weakened again in trading on Tuesday, or early Wednesday Indonesian time. The indices fell under pressure from a surge in government bond yields to their highest levels in decades. Persistent inflation concerns and high oil prices were the main market sentiments. Pressure also came from selling in semiconductor stocks.
The S&P 500 fell 0.69% to 7,691.76, marking its third consecutive session of declines. The Nasdaq Composite was the index under the heaviest pressure, plunging 1.33% to 26,289.71.
A number of technology and semiconductor stocks corrected sharply. Western Digital fell 7%, while SanDisk slumped 9%. Marvell Technology shares dropped nearly 8%, while Seagate Technology corrected more than 9%.
Meanwhile, the Dow Jones Industrial Average fell 116.38 points, or 0.22%, to 53,343.40.
Market pressure intensified after the yield on 30-year US government bonds breached its highest level in 19 years.
Yield increases also occurred in several major countries. The yield on 10-year Japanese government bonds reached its highest level in three decades, while the yield on 30-year German bonds touched its highest level since 2011. In France, the yield on 30-year government bonds reached its highest level since 2008.
The rise in yields came as investors began to worry that oil prices could remain high. The deadlock in negotiations between the US and Iran is increasing the risk of disruption to global energy supplies.
US crude oil prices rose again after also rising in trading on Monday.
Logan Capital Management portfolio manager Bill Fitzpatrick said investors are currently tending to ignore pressure from the bond market and are still focused on corporate earnings performance and developments in artificial intelligence (AI).
However, this condition is considered to have the potential to make the stock market more vulnerable to selling.
“The factors driving the rise in bond yields will not subside in the near term,” Fitzpatrick said, as quoted by CNBC International.
With a combination of soaring bond yields, high oil prices, inflation risks, and uncertainty over the US-Iran conflict, Wall Street investors are now facing pressure from two directions: the bond market and the energy market. This condition has the potential to make the US stock rally, especially technology stocks that have recorded high valuations, more vulnerable to correction.
- War Developments: Trump Claims Strait of Hormuz Open, Iran Denies
US President Donald Trump said the Strait of Hormuz is open to shipping, although Iran stated that the strategic route is still closed. Trump also stressed that no talks are currently underway with Tehran.
Negotiation uncertainty caused oil prices to rise again and pressured global markets.
US crude oil prices rose again. West Texas Intermediate (WTI) contracts strengthened 0.4% on Tuesday to US$85.26 per barrel, while Brent rose 0.17% to US$91.02 per barrel. This position is the highest since 24 July 2026.
Brent oil prices have strengthened 4.53% in three consecutive days, while WTI has climbed 3.5% in the last four days.
Shipping disruptions are still occurring. The United Arab Emirates (UAE) said it detected two ballistic missiles from Iran suspected of targeting maritime traffic. Iran denied the accusation and called it baseless.
The UAE then suspended all trade, exchange, and financial transaction activities with Iran until further notice.
The United Kingdom Maritime Trade Operations (UKMTO) also reported that a ship was hit by an unknown projectile while exiting the Strait of Hormuz. The incident damaged the engine room and caused one crew member to become a casualty.
Iran’s chief negotiator, Mohammad Baqer Qalibaf, said Hormuz will remain closed until the US ends the blockade of Iranian ports, lifts oil sanctions, unfreezes Iranian assets, and stops military threats and operations.
The Strait of Hormuz is vital to the world because before the war it was the route for about one-fifth of global oil and LNG trade.
A US official stressed that Washington still has many instruments to tighten economic pressure on Iran in the coming months.
- Global Bond Yields Explode, Government Debt Becomes a Time Bomb
Government bond yields in the US, Japan, Germany, and the UK have soared to their highest levels in decades. The surge is driven by ballooning government debt, inflation, geopolitics, and massive funding needs for AI infrastructure.
The yield on 30-year US government bonds reached its highest level since 2007 on Tuesday. The increase came amid a surge in oil prices back above US$90 per barrel, raising inflation concerns. High yields have the potential to pressure households, companies, financial markets, and the US government budget.
In Japan, the yield on 30-year Japanese government bonds was slightly above 4%, while the 10-year yield reached its highest level in three decades. Inflation concerns and expectations that the Bank of Japan may raise interest rates in September were the main drivers of the yield increase.
The yield on 30-year German government bonds reached its highest level since 2011. The yield increase came amid investor concerns about inflation, fiscal conditions, and the government’s rising financing needs.
The rise in 30-year yields in the US, Japan, and Germany reflects growing global concerns about government debt sustainability.