5% Treasury yields may disrupt markets with falling stocks and rising mortgage rates.
By Saqib Iqbal Ahmed
9:59 AM UTC – October 20, 2023
Relentless Selling of U.S. Government Bonds Sends Treasury Yields Soaring
The yield on the benchmark 10-year Treasury bond briefly reached 5% on Thursday, its highest level since 2007. This surge in yields has had far-reaching effects, impacting stocks, real estate, and more. The S&P 500 has dropped 7% from its yearly highs as investors flock to the guaranteed yields of government debt. Mortgage rates have also risen to over 20-year highs, putting pressure on real estate prices.
Wide-Ranging Effects on Markets
- Investors are reevaluating risky assets as higher interest rates persist.
- Elon Musk warns that high interest rates could dampen electric-vehicle demand.
- High-dividend paying stocks in sectors like utilities and real estate are among the hardest hit.
- The U.S. dollar has strengthened, tightening financial conditions and impacting exporters.
- The housing market is suffering, with existing home sales dropping to a 13-year low.
- Credit market spreads have widened, increasing funding costs for borrowers.
- Volatility has increased in both stocks and bonds as expectations for Fed policy shift.
These developments have raised concerns among investors, who are closely monitoring the situation. The Federal Reserve’s stance on interest rates and the U.S. government’s fiscal concerns are key factors driving this market turbulence.
Reporting by Saqib Iqbal Ahmed; Writing by Ira Iosebashvili; Editing by Stephen Coates
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How has the relentless selling of U.S. government bonds impacted various markets?
Saqib Iqbal Ahmed, October 20, 2023
Relentless Selling of U.S. Government Bonds Sends Treasury Yields Soaring
The yield on the benchmark 10-year Treasury bond briefly reached 5% on Thursday, its highest level since 2007. This surge in yields has had far-reaching effects, impacting stocks, real estate, and more. The S&P 500 has dropped 7% from its yearly highs as investors flock to the guaranteed yields of government debt. Mortgage rates have also risen to over 20-year highs, putting pressure on real estate prices.
Wide-Ranging Effects on Markets
- Investors are reevaluating risky assets as higher interest rates persist.
- Elon Musk warns that high interest rates could dampen electric-vehicle demand.
- High-dividend paying stocks in sectors like utilities and real estate are among the hardest hit.
- The U.S. dollar has strengthened, tightening financial conditions and impacting exporters.
- The housing market is suffering, with existing home sales dropping to a 13-year low.
- Credit market spreads have widened, increasing funding costs for borrowers.
- Volatility has increased in both stocks and bonds as expectations for Fed policy shift.
These developments have raised concerns among investors, who are closely monitoring the situation. The Federal Reserve’s stance on interest rates and the U.S. government’s fiscal concerns are key factors driving this market turbulence.
Reporting by Saqib Iqbal Ahmed; Writing by Saqib Iqbal Ahmed; Editing by
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