Bond and bitcoin selloff leaves stocks unsteady as JGB yields spike
Global markets found some stability after a turbulent start to December as pressure in both bond and bitcoin markets eased slightly. A solid auction of Japanese government bonds (JGBs) helped soothe nerves following a weeks-long selloff sparked by expectations that the Bank of Japan may soon raise interest rates. The improved demand for JGBs signaled that investors were regaining confidence, offering a brief pause to the broader bond market volatility.
However, risk sentiment remained restrained as the recent slump in cryptocurrencies—particularly bitcoin continued to weigh on investor appetite. The pullback in digital assets limited enthusiasm for riskier trades despite the temporary relief in bonds. Overall, markets steadied but stayed cautious, with traders keeping a close watch on central bank signals and crypto market movements.
JGB yields spike, auction eases nerves
Ten-year JGB yields hit ~1.88% the highest since 2008 before dipping after healthy auction demand, while 30-year yields set a record. Hints from BOJ Governor Kazuo Ueda that a December hike is on the table amplified the move.
Crypto slide weighs on sentiment
Bitcoin fell ~5–6% on Monday, briefly under $90,000, before stabilizing near $87,000 on Tuesday; it remains about 30% below its October peak. The pullback undermined broader risk sentiment even as some dip-buyers emerged.
Equities mixed as traders assess rates and risk
S&P 500 futures were flat after an overnight U.S. decline. In Asia, MSCI Asia ex-Japan rose ~0.3% and the Nikkei inched higher after Monday’s drop. Currency markets reflected shifting rate expectations, with the dollar soft as investors weighed odds of a Fed cut.
Outlook for the dollar and Fed policy
Deutsche Bank expects the dollar to struggle if U.S. rate cuts proceed, though major houses remain split on December. Recent data have reinforced bets on easing into year-end. Reuters+2Reuters+2
What the bond and bitcoin selloff means for portfolios
Short-duration bonds can cushion rate volatility, while diversification reduces crypto-driven swings. Liquidity planning matters if further BOJ signals or U.S. data spark cross-asset moves.
Sector snapshots
Financials
Margins sensitive to rate paths; JGB moves ripple via global funding costs.
Tech/crypto-linked
Correlated to bitcoin; volatility can pressure earnings multiples.
Defensives
Utilities/consumer staples may outperform if risk aversion persists.
Conclusion
Markets continue to react strongly to major headlines, with investors closely tracking signals from the Bank of Japan, shifting expectations around U.S. monetary policy, and ongoing volatility in the crypto market. These factors are likely to guide sentiment and market direction heading into mid-December, keeping traders focused on policy clues and risk conditions.
If stability returns to Japanese government bonds, it could provide broader support for global risk assets by easing pressure in fixed-income markets. However, any renewed weakness in cryptocurrencies or unexpected hawkish commentary from central banks has the potential to reignite market stress and push investors back into defensive positioning.
FAQs
Q : Why did bonds sell off?
A : Expectations of a BOJ rate hike raised global yield pressures, triggering selling before a solid JGB auction eased nerves.
Q : How far did bitcoin fall?
A : Roughly 5–6% on Monday, leaving it ~30% below its October peak.
Q : Which stock markets moved the most?
A : Asia was mixed: MSCI Asia ex-Japan rose around 0.3%, while Japan’s Nikkei edged higher.
Q : What does Deutsche Bank expect for the dollar?
A : It sees dollar headwinds as markets price U.S. rate cuts.
Q : Is a Fed cut in December guaranteed?
A : No. Brokerages are split on the outcome despite rising market odds.
Q : Does the bond and bitcoin selloff signal a recession?
A : Not necessarily; it reflects shifting rate expectations and risk appetite, not a definitive growth call.
Q : How can investors manage risk during the bond and bitcoin selloff?
A : Diversify, shorten duration, and use position sizing/limits in crypto.
Facts
Event
Global stocks steady after bond and bitcoin selloff; JGB auction calms yieldsDate/Time
2025-12-02T11:15:00+05:00Entities
Bank of Japan (BOJ); Japanese Government Bonds (JGBs); Bitcoin (BTC); MSCI; S&P 500Figures
10-year JGB ~1.88% high; Bitcoin near $87,000 after ~5–6% drop; MSCI Asia ex-Japan +0.3% (approx.)Quotes
“The mood (in cryptocurrencies) is ranging between fearful and resigned.” Jehan Chu, Kenetic Capital (via Reuters) ReutersSources
Reuters main wrap; Reuters JGB auction view; Reuters bitcoin move; Reuters BOJ hike signal. Reuters+3Reuters+3Reuters+3