Market Extra: ‘The bond market is still king’: Rising yields sap stocks again and boost dollar

by | Oct 12, 2023 | Stock Market

The roughly $25 trillion Treasury sector remained in firm control of much of the financial market on Thursday as long-dated yields headed toward 5% again, taking the steam out of equities and helping the greenback recoup this week’s earlier losses.

Investors resumed a selloff of government debt that’s sent 10- and 30-year yields to some of their highest levels in 16 years, with each jumping respectively to 4.7% and almost 4.9% as of New York afternoon trading. Thursday’s moves broke a two-day rally seen through Wednesday, which had sent both rates to their lowest closing levels of this month as traders focused on a possible end to Federal Reserve rate hikes. September’s hotter-than-expected headline inflation figures from the consumer-price index, released on Thursday, boosted the market-implied likelihood that the Fed would need to hike in December. The data also cast doubt on policy makers’ view that they could rely on a recent runup in long-dated yields to do some of the heavy lifting for them and to tighten financial conditions without the need for another rate hike, analysts said. “The bond market is still king,” Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, said via phone on Thursday. The post-CPI broad-based selloff in Treasurys “is helping the dollar recoup some losses seen earlier this week and weighing on the stock market after a four-day rally.” While it’s too soon to tell how higher longer-term rates will likely impact Fed policy, one thing is clear, Chandler said. The market moves being seen on Thursday in response to September’s …

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