What happened
Global long-term government bond yields have surged, with the US 10-year Treasury yield closing at 4.797% on September 1, the highest since January 2025, and Japan's 10-year yield touching 3% for the first time in 30 years.
Analysts say the move is driven by multiple factors: escalating US-Iran conflict lifting inflation expectations, hawkish signals from global central banks, and heavy bond supply from governments and AI-driven corporate debt issuance.
The yield spike transmits to A-shares via valuation pressure on growth and tech stocks, capital outflows as dollar assets become more attractive, and suppressed risk appetite after Japan's bond market milestone.
Why it matters
Rising US Treasury yields, the global pricing anchor for assets, directly pressure high-valuation tech sectors, especially AI hardware, which rely heavily on external financing and are sensitive to higher funding costs.
However, China's improving fundamentals and strong policy support—including property easing, consumption expansion measures, and a loose monetary stance—could cushion the impact, limiting A-share downside to a choppy, structurally driven market.
The market has shifted toward value and dividend-paying sectors with stable cash flows, while fund rotation among A-share sectors has accelerated rather than favoring a single track.
Key facts
US 10-year Treasury yield hit 4.797% on Sept 1; Japan's 10-year yield reached 3%, a 30-year high, and its 30-year yield exceeded 4.18%.
China's August manufacturing PMI rose to 49.8%, up 0.6 percentage points month-on-month, with new orders and production above 50.
From January to July, profits of China's large-scale industrial enterprises grew 17.6% year-on-year, with electronics industry profits surging 1.1 times.
What to watch next
Watch the evolution of the US-Iran conflict and the Fed's September meeting—if tensions escalate, global risk assets could sell off broadly; a quick de-escalation would shift focus back to the Fed's rate decision.
Monitor whether A-share trading volume expands and whether the leading sectors rotate back to technology, which analysts cite as key indicators for a stable market rebound.
If global yields remain elevated, high-valuation growth stocks may face persistent headwinds, but policy-backed sectors with solid earnings could deliver structural opportunities.