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Most Asian stock indices are heading for weekly losses on Friday as pressures in global bond markets persist, while a diplomatic stalemate in the Gulf has pushed oil prices toward one-month highs, keeping inflation risks at the forefront of investors' concerns.

U.S. Treasury yields resumed their upward trajectory after a surprise intervention by the U.S. Treasury on Wednesday provided only a brief, roughly one-day respite from the sell-off.

The rise in yields came despite remarks by U.S. Treasury Secretary Scott Bessent that he may increase government Treasury buyback operations, alongside his proposal for fiscal consolidation. However, analysts doubted the government's ability to find sufficient spending cuts to meaningfully reduce the budget deficit, which exceeds 6% of gross domestic product (GDP), at a time when interest payments alone amount to $1.2 trillion this year.

Steven Zeng, a strategist at Deutsche Bank, stated that markets have historically pushed back when they see fundamental factors—such as record debt levels and historically large deficits—on their side. He warned that additional interventions could become too costly to sustain. Zeng added that there is also a potential cost to the Treasury's institutional credibility if its activist approach erodes some of the trust and benefits accumulated over years from adhering to a regular and predictable framework.

Investors demonstrated skepticism regarding the Treasury's ability to calm the bond market, as 30-year bond yields climbed back to 5.25%, while 10-year yields reached 4.71%. Markets assume that the 5.30% level now represents a pain threshold for the Treasury, similar to the 160 yen per dollar mark that became a sensitive limit for Japanese policymakers.

Higher yields lead to increased global debt servicing costs at a time when big tech companies are borrowing heavily to fund AI-related capital expenditures. They also raise the discount rate on corporate earnings and exert pressure on equity valuations.