The sell-off in global bond markets persisted, with investors ramping up bets that the Federal Reserve could be forced to hike interest rates this year.
The benchmark 10-year Treasury yield hit a 16-month high of 4.687% on the previous day, while the 30-year bond yield rose to 5.198%, levels not seen since 2007.
The Fed will refrain from cutting rates this year, according to a majority of economists surveyed by Reuters, most of whom have pushed back their calls for rate reductions until next year, hoping that the current spike in inflation proves temporary.
According to the CME FedWatch tool, traders are currently pricing in a more than 50% probability of a hike in December, a radical shift from the two rate cuts expected prior to the war.
Focus today will center on the minutes of the latest Fed meeting, scheduled for release at 1800 GMT.
Investors were also awaiting Nvidia's results to see if the world's most valuable company could help markets weather rising borrowing costs.
'Today's session will have a clear protagonist (Nvidia), although its results will not be known until after the US close,' Renta 4 analysts said in a note to clients, also highlighting SpaceX's filing of its IPO prospectus with the SEC.
Markets will be 'watching to validate whether the AI narrative can continue to support markets facing a sharp rebound in yields stemming from the energy shock,' Renta 4 added.
At 0704 GMT on Wednesday, Spain's blue-chip IBEX 35 was down 5.20 points, or 0.03%, at 17,664.90 points, while the FTSE Eurofirst 300 index of leading European shares retreated 0.18%.
In the banking sector, Santander rose 0.04%, BBVA gained 0.13%, Caixabank shed 0.50%, Sabadell climbed 0.25%, Bankinter slipped 0.04%, and Unicaja Banco lost 0.37%.
Among non-financial heavyweights, Telefónica fell 0.56%, Inditex shed 0.68%, Iberdrola appreciated by 0.05%, Cellnex dropped 0.62%, and oil major Repsol rose 0.30%.
(Reporting by Benjamín Mejías Valencia; editing by Jorge Ollero Castela)
