Global stocks inch higher as oil slides and bond risks simmer beneath low volatility

Global equities nudged higher into August 26, with major US benchmarks – the Dow, S&P 500 and Nasdaq – all finishing in positive territory for a third straight session. The move came as oil prices retreated, easing some of the inflation pressure that had weighed on risk assets, and as a pullback in US 10‑year Treasury yields offered relief to equity valuations.

Beneath the calm, however, fixed-income markets remain a key source of risk. Over recent weeks, long-dated government bond yields in the US and Europe have risen sharply, reflecting investor unease over sticky inflation and widening fiscal deficits. Strategists warn that higher “risk‑free” yields can tempt capital away from stocks and force investors to reassess lofty price‑to‑earnings multiples, particularly in growth and technology names.

For now, market sentiment still looks benign. The CBOE Volatility Index, Wall Street’s so‑called fear gauge, is trading near 15 – well below the 20 level often associated with turbulent conditions. Yet several asset managers caution that this low volatility may be lulling investors into a false sense of security. With key US inflation data and a closely watched Federal Reserve speech on deck later this week, traders are bracing for the possibility that equities, bonds and currencies could all see sharper swings if the policy outlook shifts unexpectedly.