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Treasury yields edge higher and the curve flattens as markets price in a more hawkish Fed. Wednesday's hike boosts confidence in the Fed's commitment to fighting inflation. That makes shorter-term yields rise faster than long-term ones.
Markets opened on shaky footing on Monday. Damage to Saudi Arabia’s crucial East-West pipeline stoked worries about oil shortages and inflation, sending oil prices and bond yields higher. Just a few days later, both seem like a distant memory, as oil prices fall premarket and AI stocks jump.
US stock futures were little changed on Friday morning as investors continued to calibrate to the Federal Reserve's first rate hike in three years and existential fears about artificial intelligence's capabilities.
Stocks and bonds swooned yesterday after the Federal Reserve hiked interest rates for the first time in three years—only to reverse course and charge higher in premarket trading this morning. One explanation, according to Mohit Kumar, Jefferies’ chief European economist: Investors realize they may have overreacted to Fed Chairman Kevin Warsh’s hawkish tone. “I don't think Warsh indicated a series of rate hikes,” Kumar said.
Will history hold for the bond market?
JPMorgan Chase CEO Jamie Dimon said Wednesday he still isn't convinced the problem of high inflation has been defeated.
Stocks took a sharp turn and ended Wednesday's trading session lower after the Federal Reserve delivered a quarter-point increase in interest rates. The Dow tumbled 1.2% or 630 points. The S&P 500 dropped 0.
Fed Chairman Kevin Warsh did nothing to quell the bond market angst. Bond traders expected the Fed to raise interest rates. That should have quelled some angst and raised bond prices. Instead, the 10-year yield is elevated and above 5% mark.
The bond market's reaction to the Fed decision has so far been nothing to write home about. The Fed raised interest rates, a decision that was unanimous. Bond yields, both on the 2- and 10-year, were lower ahead of the decision.
For bond traders life is usually simple, steady and calm. This summer was anything but quiet–and Federal Reserve Chairman Kevin Warsh may be the key to fixing that. Over the past two months bond traders feeling unnerved by strong economic growth, inflation fears, and growing borrowing needs have moved fast to dump bonds.
Here's a check of the markets in the first few minutes of trading.
Ten-year Treasury yields (^TNX) crossed above 5% for the first time since 2007. This comes ahead of the Federal Reserve's latest interest rate decision on Wednesday, where Wall Street is bullish that officials will hike rates. Zacks Investment Management chief market strategist Brian Mulberry comes on Opening Bid to address where other risks in the market may or may not be showing up.
The 10-year yield hits its highest level in more than 19 years, summing up investors’ worries about a flurry of Fed interest-rate hikes.
The Fed is now being forced into a hike that will preserve its credibility. That could be good for stocks and long-term bonds.
The yield on the 10-year Treasury note is holding below 5% after new data showed core consumer prices rising more than expected last month. The report reinforced bets that the Federal Reserve could raise interest rates next week, leading to an uptick in short-term Treasury yields, which are especially sensitive to the rate outlook.
Stocks were down on Thursday as investors watched for stress signs in the bond market as long dated bond yields as oil prices remain elevated .
Stocks fell on Monday as long-dated bond yields continued to climb amid surging oil prices, raising concerns that the Federal Reserve will need to hike rates at its policy meeting next week.
Stocks rose after the monthly jobs report
The Dow Jones Industrial Average, S&P 500 and Nasdaq edged lower today as a strong August jobs report provided another datapoint for Federal Reserve policy expectations. Also, diesel prices hit a record high, and another retail brand, Lululemon Athletica, took an earnings hit.
With the U.S. economy gaining 162,000 jobs in August and unemployment remaining on a steady course, Fed officials won't need to worry as much about labor conditions when weighing the possibility of raising interest rates later this month. If August's jobs growth had been weak again, it might have raised concerns that the economy wasn't strong enough for higher interest rates.
This week was a dramatic one for bond yields. Yields took another step down yesterday after Fed Governor Christopher Waller said he would support holding interest rates steady if August inflation data supports it.
As long-term bond yields climb to new heights, a divide over what is driving the historic run-up has opened between Federal Reserve policymakers and Wall Street.
The Dow Jones Industrial Average, S&P 500 and Nasdaq saw gains in morning trading as the odds of a Fed rate hike plunged, geopolitical unrest continued and Nvidia kept acquiring. Here is what is driving the markets today: The Fed’s will-they-won’t-they rate hike: The odds of a Fed rate hike this month are now a coin flip, according to CME FedWatch.
The market is pricing in a rate increase as the most likely outcome at the central bank's upcoming meeting, according to CME Fed Watch. Odds the Fed will announce an increase in rates on Sept. 16 ticked lower to 64% from 66% on Wednesday, though were still significantly higher than they were just last week. The slight pullback came after New York Federal Reserve President John Williams said the recent rise in Treasury yields reflected a strong economy and signaled a wait-and-see approach to September's meeting.
Bond yields stayed elevated on Wednesday as oil prices hovered near $95 a barrel, spurring worries of higher inflation.
New York Fed President John Williams indicated that he doesn't see clear-cut evidence right now that the Fed must raise interest rates to respond to persistent inflation. In an interview with CNBC, Williams said the current spate of rising prices is due in part to passing causes: one-time price increases from the Trump administration's tariffs and higher energy prices from the Iran conflict. It is not yet certain, he said, that those trends are snowballing into a broader bout of inflation that the Fed must respond to.
Great earnings are now old news. The next market hurdles are the jobs report, CPI, and the Fed’s rate decision.
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