Wall St. conks out on rising Treasury Yields, inflation angsts



by   |  VIEW 1165

Wall St. conks out on rising Treasury Yields, inflation angsts

On Tuesday, all three key indices of Wall St. had rounded off the session in a red sea of Nile with Wall Street bellwether S&P 500 marking up its worst intra-day plunge since May, as a slew of US stocks fell across the board following a Miltonian rally in US Treasury Yields which had been heating up since last week’s US Fed policy meet.

On top of that, benchmark S&P 500 alongside tech-heavy Nasdaq have been set to post their largest monthly percentage declines in more than a year. Aside from an increase in US Treasury Yields with 10-year Treasury bond notes trading at 1.525 per cent, hitting the highest in more than three months, a double whammy of a deeper debarkation of inflation concerns alongside a contemptuous negotiation over lifting up the US Fed’s borrowing limit for the Government, had simmered investors’ optimism further.

US Treasury’s Janet Yellen, in tandem, had said earlier in the day that the US Government would run out of money by October 18 unless the US Fed could lift up its debt-ceiling for the Govt., putting pressure on a divided US Fed to taper of fiscal support for the economy alongside to introduce a rate-hike much earlier-than-anticipated as a heightening up of debt-ceiling would unleash a further rise in inflation indicators, in due course spurring up the US Treasury Yields’ safe-haven bid.

Apart from that, a stronger US Dollar had fanned the flames further.

Wall St. collapses as Treasury Yields hit three-month peak

Citing statistics, in the day’s Wall St. wind-down, trade-sensitive Dow took a tattering header of 1.63 per cent to 34,299.99 and benchmark S&P 500 had been hit with a hefty whiplash of 2.04 per cent to 4,352.63, while tech-heavy Nasdaq was nudged as much as 2.83 per cent lower to 14,546.68.

Meanwhile, addressing to a tireless rally in US Treasury yields, a senior market strategist at LPL Financial in Charlotte, North Carolina, Ryan Detrick said, “The big picture is the sudden surge in the past week of yields, which has led to a 'sell first, ask questions later' mentality.

(But) there are multiple factors weighing on sentiment today. The back-and-forth in Washington with the debt ceiling and the spending bill and potential higher taxes have weighed on overall investor psyche and has led to a pretty good-sized sell-off”.