US Treasury yields rise to highest level in 19 years
10-year US bond yields reach levels not seen since 19 years ago
Translated by Qiyas from الراي — Original source
Bloomberg – Stocks fell as rising oil prices intensified pressure on U.S. Treasury bonds, pushing 10-year yields to levels not seen in 19 years and continuing to strongly curb risk appetite. Futures for the S&P 500 and Nasdaq 100 indices declined by 0.4% and 0.3%, respectively.
Brent crude surpassed $107 per barrel, bringing its gains to nearly 19% since the start of September. Oil prices continued to rise as traders assessed risks to Middle East supply, amid the precautionary suspension of a vital Saudi pipeline following attacks.
The MSCI Asia Pacific index fell 0.9%, while the European Stoxx 600 index dropped 0.7%. Deutsche Bank shares led losses in the banking sector, following the decline of their U.S. peers after Bank of America forecast stable trading revenues for the current quarter.
Elevated bond yields are shaping market direction, drawing traders’ attention to risks stemming from rising energy prices, increasing price pressures, and worsening debt levels. Enthusiasm for artificial intelligence bets, which have been the primary driver of this year’s stock gains, remains subdued amid intensifying debate over whether the technology could cause catastrophic harm.
The sharp rise in oil prices and last week’s U.S. inflation reading, which came in above estimates, heightened concerns ahead of the Federal Reserve’s decision today, with traders pricing in a probability of over 90% for a rate hike.
The bond selloff reflected broader pressure on long-term borrowing costs in major advanced markets, with a gauge of global government bond yields remaining at elevated levels.
Widening fiscal deficits, massive debt issuance, and funding for artificial intelligence investment are prompting investors to demand greater compensation for holding longer-term debt.
The latest bond market decline has increased the significance of Federal Reserve Chair Kevin Warsh’s decision ahead of the central bank’s monetary policy announcement tomorrow.
Higher bond yields may also draw investors away from equities, posing a challenge to a rally driven by strong AI-related earnings and a resilient economy.
Elsewhere in the markets, the Bloomberg spot dollar index rose 0.1%, putting the U.S. dollar on track for a second consecutive session of gains for the first time this month. Meanwhile, the Japanese yen fell 0.3% to 154.83 per dollar.
Gold continued its decline below $4,300 per ounce, dropping 0.2% to $4,292. Higher interest rates typically reduce the appeal of the metal, which yields no income. Bitcoin also fell 2.4% to $77,225.
