U.S. stock markets slipped as the benchmark 10-year Treasury yield jumped to about 5.05%, its highest level since 2007, pressuring interest-rate sensitive shares on Sept. 23.
Benchmark 10-year yields rose 8.7 basis points to 5.054% as investors reacted to a stronger-than-expected S&P Global flash US Composite PMI reading and the prospect of further Federal Reserve rate moves, Reuters reported.
Equities fell across the board: the S&P 500 dropped 0.53% and the Nasdaq Composite was down about 1.05% while the Dow was off roughly 0.18%, Reuters said. Higher yields lifted short-term Treasury rates as well, with the 2-year note climbing toward multi-year highs.
Analysts linked the move in yields to robust economic data. S&P Global’s flash US Composite PMI rose to 58.4 in September, Reuters noted, a more-than-five-year high that traders said reinforced expectations for additional Fed tightening.
Fed funds futures traders were pricing about 73% odds of an October rate hike, Reuters wrote, and that shift in expectations pushed investors toward safer, higher-yielding government debt and away from growth-oriented stocks.
Higher borrowing costs tend to pressure valuation-sensitive sectors, and market commentary on Wednesday pointed to selling in megacap and technology names as yields climbed, Reuters reported.
Bond-market data earlier this week had already shown the 10-year touching roughly 5.00% on Sept. 20, a level cited in recent market coverage, and traders said renewed oil-price and inflation concerns were adding to the upward pressure on yields.
For readers tracking recent moves, our reporting pulls together contemporaneous market levels and trader reaction rather than offering investment advice. The rise in yields is the key driver market participants cited for the day’s weakness in stock markets.
Sources
- Reuters — reported the 10-year yield rose to 5.054%, the S&P flash PMI reading, index moves and Fed funds futures odds.
- CNBC — covered the 10-year Treasury reaching the highest levels since 2007 and broader market reaction.
- Financial Times — provided context on bond-market moves to 2007 highs.
