Stocks Slip as Treasury Yields Climb

Equity markets in the US were unable to build on Tuesday’s positive momentum, but major indices were able to shrug off early losses to finish the day essentially flat. Today US index futures are down 0.3%-0.4% as investors continue to grapple with the headwind of rising Treasury yields. In Europe today, the FTSE is flat and the Dax is up 0.5%. 

Clearing 4.60%, the US 10-year treasury note yield has now climbed 1.00% from its September low despite 1.00% in total cuts to the Fed Funds rate over the last several months and is at its highest level since April. This action indicates that investors expect the pace of Fed interest rate cuts to slow (as forecast in the recent dot plot) or stop altogether. Yesterday, US weekly initial jobless claims came in better than expected (219K vs street 224K), a sign of a robust economy.

The US Dollar had rallied yesterday but is backing off today, enabling cryptocurrencies to bounce back. Bitcoin is up 0.9% today after falling over 3.0% yesterday. Energy markets are rising this morning with Crude Oil up 0.95% and Natural Gas up 4.3%. Metals are giving back some of yesterday’s gains with Gold down 0.6%, Silver down 1.4% and Copper down 0.3%.

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