Bond Market Shock Punches $10B Hole in Budgets as ASX Erases Year's Gains

Australian shares have all but erased their gains for 2026 in a week of heavy selling, with investors spooked by soaring borrowing costs and fears a global bond market sell-off will tip the economy into recession. The ASX tracked global equity markets sharply lower on Friday as government bond yields surged to fresh multi-year highs, driven by escalating Middle East hostilities that sent oil prices towards US$110 a barrel – the highest in almost four months.

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