Global markets steadied on Wednesday as a bond sell-off triggered by investors’ concerns about inflation and surging oil prices eased. US long-term borrowing costs climbed to their highest level in almost a quarter of a century on Tuesday as a recent sell-off in the Treasury market deepened. After hitting 5.29 per cent on Tuesday, yields on 10-year US Treasuries were stable at 5.23 per cent in Asia on Wednesday, while returns on Japanese 10-year government bonds were flat at 3.09 per cent.

Mansoor Mohi-uddin, chief economist at Bank of Singapore, said comments from Fed officials overnight indicated there would be at least one more rate rise this year. An increasingly unsustainable debt pile was the fundamental driver of rising yields, Mohi-uddin said, noting that even with an upcoming US election, such structural problems were unlikely to be addressed. Meanwhile, the Japanese yen strengthened on Wednesday, rising as much as 0.6 per cent to above ¥157 per dollar.

The move was probably due to traders seeking to protect against any intervention as the region headed into China’s extended Golden Week. Japanese officials this week warned against the currency depreciating. On Tuesday finance minister Satsuki Katayama said the yen’s valuation was “problematic”, while on Monday the country’s chief currency official, Atsushi Mimura, said Tokyo remained on high alert over the exchange rate.

Brent crude, the international oil benchmark, edged up 0.6 per cent to $103.17. Equity markets have largely been stable despite the selling pressure on global bonds. Japan’s Nikkei 225 rose about 2 per cent on Wednesday, while Australia’s ASX 200 gained 1 per cent.