Rising Bond Yields Drag Wall Street Lower as Markets Await Fed Minutes and Jackson Hole Signals

Wall Street closed lower Tuesday with semiconductors leading declines in the technology sector, as Middle East uncertainty pushed bond yields to multiyear highs and stoked concerns about borrowing costs and inflation. Korean chip stocks bore particular pressure from the global bond selloff. Japan's benchmark bond yields approached 3%, driven by a combination of mounting inflation fears and fiscal worries.

The U.S. dollar drifted near multi-month lows against major peers on Wednesday as Treasury yields pulled back slightly from those recent peaks, providing some relief for gold prices, which edged higher in early Asian trade after a sharp prior-session drop. Investor attention is focused squarely on the Federal Reserve's July meeting minutes, due Wednesday, with one market analyst flagging that the release is likely to carry a neutral to mildly hawkish tone, enough to sustain near-term outflows from equities and gold while keeping dollar bulls in play ahead of the Jackson Hole symposium. The Reserve Bank of Australia's Deputy Governor Hauser separately flagged worry about inflation and upside risks, adding to a broader global picture of central banks remaining on guard.

UK inflation data is also due imminently and is expected to rebound to a four-month high on surging energy costs, a reading that could further pressure the British pound.