Surging Bond Yields Pressurize Stocks
Rising Bond Yields Push Stocks Lower as Global Borrowing Costs Surge
Anonymous
Surging U.S. Treasury yields, fueled by persistent inflation concerns, rising oil prices and expectations that interest rates will remain high, pushed major stock indexes lower. The 10-year yield climbed above 5.2%, near its highest level in roughly two decades, while the selloff in government bonds added pressure to borrowing costs across the economy. Higher yields have lifted mortgage rates above 7%, weighing on homebuilders and sending shares of major builders lower. Nvidia was a notable exception, rising on news of a $150 billion buyback.
Key Points
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Australia raised its cash rate to a 15-year high, and investors were betting it could rise further, underscoring that elevated borrowing costs are a global concern.
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The U.S. two-year Treasury yield rose more than 57 basis points during September to nearly 5%, as traders priced in the possibility of three Federal Reserve rate hikes by the middle of next year.
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The 30-year Treasury yield topped 5.50%, its highest level since 2004, according to the Korean report.
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Market breadth showed a sharp split beneath the index: Goldman Sachs data indicated about 45% of S&P 500 stocks had a negative three-month beta, meaning their returns moved opposite the index over that period.
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U.S. government debt had recently topped $40 trillion, another factor weighing on the appeal of government bonds; Chevron CEO Mike Wirth also warned that mechanisms that can moderate oil prices were largely spent.
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