Dow Futures Tumble Amid Rising Geopolitical Tensions, Rising Treasury Yields

U.S. stocks could open in the red on Wednesday as rising geopolitical tensions in the Middle East spook investors.

While investors have been looking for cues on which way the markets will go this week, President Donald Trump’s “One Big Beautiful Bill” hangs in the balance as Republicans wrangle over Medicaid and deduction caps, among other things.

U.S. intelligence has noted that Israel is planning to attack Iran’s nuclear facilities, threatening to escalate tensions in the Middle East, according to a report by CNN. While it is not certain yet if Israel intends to act on it, this has put oil prices on the boil once again.

Dow Jones futures were down by 1% at the time of writing, the S&P 500 futures fell 0.73%, and the tech-heavy Nasdaq 100’s futures declined 0.63%. Futures of the Russell 2000 index were down by 0.92%.

Meanwhile, the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) were both down by 0.61% on Wednesday morning.

The 30-year Treasury yield is back above the 5% mark, rising 5 basis points to hover at 5.022%. The benchmark 10-year Treasury yield was hovering at 4.531%, also rising by 5 basis points.

Bitcoin (BTC) rose 1.33% in the past 24 hours.

Asian markets ended Monday’s trading session on a largely positive note, with the TWSE Capitalization Weighted Stock index leading with gains of 1.27%, followed by KOSPI at 0.91%, and Hang Seng index at 0.61%.

The Shanghai Composite closed 0.21% higher, while the Nikkei 225 declined 0.62%.

Two Things To Keep An Eye On

Carson Group’s Vice President, Global Macro Strategist, Sonu Varghese pointed out two things that investors should keep an eye on in the current market scenario.

The first thing on Varghese’s mind is how big the tax bill–or the deficit, in other words–will be.

His preliminary analysis shows that if the Trump administration tries to maintain the status quo, it could result in a $4 trillion fiscal deficit over the next decade.

If the administration tries to include a stimulus to boost the economy, the bill is expected to rise to $5 trillion in this period.

The other aspect that Varghese is focusing on is the bond market’s reaction to the increased deficits. Earlier this week, the 30-year Treasury yield briefly surged past the 5% level before simmering down slightly.

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Also See: Morgan Stanley Warns Of 3 ‘Profound’ Disconnects As Equities Rally Post US-China Tariff Pause

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