Rising bond yields put the brakes on stocks
TLT•Bond yields and oil prices rose as investors weighed the prospect of borrowing costs remaining high. The 10-year U.S. Treasury yield topped 5.27%, while Brent crude reached $107 a barrel.
1. Yields climb
The 10-year U.S. Treasury yield rose above 5.27% on Monday, a 19-year high, and was up nearly 50 basis points in September. The two-year yield climbed more than 57 basis points this month to the threshold of 5%, as traders priced in three more Federal Reserve rate hikes by the middle of next year.
2. Stocks under pressure
U.S. equity futures fell 0.2% in Asia alongside most regional markets. Nvidia’s $150 billion boost to its buyback plan helped limit the Nasdaq’s decline to 0.9% on Monday, while China’s CSI300 remained near a one-year low.
3. Rates and oil
Australia raised its cash rate to a 15-year high, and the Reserve Bank of Australia cited inflation risks linked to an energy supply disruption, growth and inflation running higher than expected. Brent crude climbed to $107 a barrel as investors saw no sign of a breakthrough in the Middle East.
