Treasury yields fall sharply, with 10-year at 2.8%, as investors seek safety in government bonds

Investors jumped on Treasurys on Thursday morning, making yields much lower as they sought security from a stock market crash that looked set to continue after the Dow Jones Industrial Average and S&P 500 suffered losses. older in one day in almost two years.

What do yields do
  • The performance of the 10-year Treasury note TMUBMUSD10Y,
    fell to 2.794% from 2.884% at 3pm on Wednesday.

  • The performance of the 2-year Treasury note TMUBMUSD02Y,
    it was 2.595% compared to 2.677% on Wednesday afternoon.

  • The yield on 30-year Treasury bonds TMUBMUSD 30Y,
    it was 3.009%, below 3.07% on Wednesday afternoon.

What is driving the market

Global stocks fell on Thursday and US stock indexes opened lower, extending Wednesday’s brutal sell-off from the Dow Jones Industrial Average DJIA.
a drop of 1,164.52 points, or 3.6%, and the S&P 500 SPX,
down 4%, its biggest one-day drop since June 11, 2020. The Nasdaq COMP,
however, he managed to recover with a gain in the initial negotiation.

Wednesday’s sale was triggered by disappointing results from retailer Target Corp. TGT,
which showed that rising costs had shrunk by margins more profoundly than expected, analysts said. Growing fears of a stagnant environment – a combination of persistent inflation and stagnant economic growth – continued to resonate in the markets on Thursday morning.

I’ll see: The next big shoe to fall in financial markets: inflation not responding to Fed rate hikes

Data released Thursday showed initial unemployment claims rose to a four-month high of 218,000 last week, but most of the increase appeared to be tied to just a few states like Kentucky and California. Claims were expected to reach a seasonally adjusted 200,000 by the end of May 14, according to economists surveyed by The Wall Street Journal.

The Philadelphia Fed’s manufacturing index fell sharply to 2.6 in May from 17.6 the previous month, the lowest level of activity in two years. Economists surveyed by the Wall Street Journal expected a reading of 15. However, any reading above zero still indicates an expansion in the manufacturing sector.

What analysts say

“Something went wrong with the soft landing. With the fall in stocks overnight and risky assets generally under pressure, investors are beginning to question not only the prudence of Powell’s inflation containment mantra. at all costs, but also the ability of monetary policy makers to stay the course, “said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery.

“Powell put the market on materially tighter financial conditions and a full price on the hiking campaign, now investors will wait to see if the Fed flickers,” they wrote in a note. “Translating this to the US-type market encourages us to see the flattening of the curve continue overnight with 2s / 10s sliding to just 19.5 bp after closing below the 40-day moving average on Wednesday. days “.

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