Stocks wobble as bonds slump to monthly loss
SPY•U.S. Treasury yields climbed to multiyear highs, putting bonds on track for their heaviest monthly fall in two years, while most Asian equity markets slipped. Brent crude rose to $106.60 a barrel, and markets fully priced in a Reserve Bank of Australia rate hike.
1. Yields climb further
The 10-year U.S. Treasury yield rose above 5.27%, a 19-year high, after gaining nearly 50 basis points in September. The two-year yield gained more than 57 basis points this month to nearly 5%, as traders priced in three more Federal Reserve rate hikes by the middle of next year.
2. Stocks and bonds under pressure
The bond selloff was the heaviest in two years. A $150 billion increase in Nvidia’s buyback plan lifted its shares and helped limit the Nasdaq’s overnight decline to 0.9%. Bond markets in Japan, South Korea and Australia were also under pressure, while most regional equity markets fell.
3. Oil and Australia rates
Brent crude rose to $106.60 a barrel. The Australian dollar was steady at $0.7012, with markets pricing in an RBA rate hike and another by February. Westpac strategists questioned whether the governor would be sufficiently hawkish to match market expectations, particularly if the decision was not unanimous.
