A U.S. government bond selloff resumed on Thursday, pressuring stocks even after the Treasury pledged a day earlier to buy back more longer-dated debt. S&P 500 futures slipped as yields climbed back up, while Nasdaq 100 futures held up better on continued optimism around AI spending.
Yields climb back after Treasury's buyback pledge
A bond market reprieve appeared to be fading on Thursday as U.S. government bonds sold off again, a day after the Treasury pledged to buy back more longer-dated debt. The 30-year yield rose 3.05 basis points to 5.2235% after falling to 5.1765% earlier. Yields move inversely to prices.
The benchmark 10-year yield rose 1.9 basis points to 4.6723%, following a 5 bps fall on Wednesday. German and Japanese government bond yields eased, however, even as U.S. yields climbed.
According to Lawrence Gillum, chief fixed-income strategist at LPL Financial: "The buyback announcement is more of a band-aid than a panacea." He added that the move is still a reminder that the Treasury is paying attention and will act to keep yields from rising too high too quickly.
S&P 500 futures slip as Nasdaq 100 holds up better
Higher bond yields typically pressure stocks, and Thursday was no exception. The pan-European STOXX 600 and S&P 500 futures slipped 0.20% and 0.14%, respectively.
The decline in futures tracking the tech-heavy Nasdaq 100 index was more muted, helped in part by optimism toward AI. Marta Norton, chief investment strategist at Empower, said tech companies worrying about the yield curve are being penny-wise and pound-foolish, since the fundamental AI story charges ahead regardless. She added that tech firms cannot afford to stop their AI spending given the potential hit to their businesses if they fall behind — a dynamic that may limit the impact of bond market turbulence on AI stocks.
An MSCI index of global stocks fell for four consecutive sessions, its longest losing streak since March, before a 0.30% gain on Thursday.
Inflation concerns linger behind the moves
Elevated oil prices also dampened sentiment, with Brent crude futures rising 1.54% to $93.06 a barrel as disruption in the Strait of Hormuz showed few signs of easing.
Minutes of the Federal Reserve's latest policy meeting released on Wednesday showed that concern about inflation deepened. Several policymakers appeared ready to raise interest rates, and many said an interest rate hike would be needed if inflation does not decline to the central bank's 2% target.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
