Asian markets mixed following global bond rout, Middle East tensions ease

September 25, 2026 (MLN): Asian markets traded mixed on Friday as investors weighed a sharp rise in global bond yields while monitoring developments surrounding the planned Trump-Xi meeting and easing tensions in the Middle East.

Japan’s Nikkei 225 gained 1.06%, while the broader Topix advanced 1.19%. Australia’s S&P/ASX 200, however, declined 0.46%, while Hong Kong’s Hang Seng Index fell 1.69%. Markets in mainland China and South Korea remained closed for a holiday, according to CNBC.

Sentiment in the region received some support from signs of easing Middle East tensions after Reuters reported that U.S. and Iranian negotiators in New York were discussing a phased agreement aimed at ending the standoff in the Persian Gulf and reopening the Strait of Hormuz.

Meanwhile, global bond markets remained under pressure, with the U.S. 10-year Treasury yield climbing to 5.225% late Thursday, its highest level since 2007. The 30-year Treasury yield also reached 5.502%.

The rise in yields has been driven by hawkish remarks from Federal Reserve Governor Michael Barr, persistently elevated energy prices linked to the Iran war and stronger-than-expected purchasing managers’ data.

According to CME FedWatch, markets were pricing in around a 68% probability of a Federal Reserve rate hike in October.

Higher Treasury yields have also pushed up borrowing costs, with the 30-year fixed mortgage rate rising to 7.45%, its highest level since 2024.

In the U.S. equity market, the Dow Jones Industrial Average was heading toward its fourth consecutive weekly decline, down 0.6% for the week. The S&P 500 was on track for a 0.7% weekly gain, while the Nasdaq had advanced 1.6% so far this week.

Investors will now turn their attention to the University of Michigan consumer sentiment report and durable goods data for further clues on the outlook for the U.S. economy and interest rates.

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